The Bank of England has increased the bank rate by 0.25 percentage points to its pre-pandemic level of 0.75%.
The Bank's monetary policy committee (MPC) voted on 16 March 2022 by 8-1 for the increase in interest rates, with just one member preferring to maintain rates at 0.5%.
The Bank raised the base rate of interest from 0.25% in December 2021 in a bid to control ‘second-round' inflationary pressures.
The MPC said:
"Given the current tightness of the labour market, continuing signs of robust domestic cost and price pressures, and the risk that those pressures would persist, the Committee judged a 0.25 percentage point increase was warranted."
The Institute for Economic affairs, however, said it was "too little too late", claiming that "fears that further hikes will hold back the economy are misplaced."
Suren Thiru, head of economics at the British Chambers of Commerce said:
"Increasing interest rates will do little to curb the global causes behind this inflationary surge and risks intensifying the headwinds facing the UK economy by damaging confidence and deepening the financial squeeze on consumers and businesses."
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