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LONDON, ENGLAND - AUGUST 9: A view of the exterior of the Bank of England on August 9,2022 in London, England. (Photo by Peter Dazeley/Getty Images)

Bank of England hikes interest rates following inflation shock

March 23, 2023

    (CNN) — The Bank of England hiked interest rates by a quarter of a percentage point Thursday, extending its long-running fight against inflation, which rose unexpectedly in February.

The central bank’s 11th consecutive rate hike takes its benchmark rate to 4.25%, the highest since October 2008. Like other major central banks, it has pushed ahead with raising the cost of borrowing despite recent turmoil in the banking sector.

The Bank of England said that since its last meeting in February, inflation “had surprised significantly on the upside and the near-term path of GDP was likely to be somewhat stronger than expected previously.”

UK consumer prices surged by 10.4% in February compared with a year ago, the first acceleration in inflation in four months, as food prices soared and the cost of visiting restaurants and hotels increased.

“CPI inflation increased unexpectedly in the latest release, but it remains likely to fall sharply over the rest of the year,” the central bank added.

The US Federal Reserve hiked rates by a quarter of a percentage point Wednesday. The European Central Bank increased its rates by half a point last week — even as markets were being roiled by the banking crisis — and the Swiss National Bank followed with a hike of the same magnitude earlier Thursday.

— This is a developing story and will be updated.

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