The Bank of England on Thursday lifted interest rates by a quarter-point to 5.25%, its highest level since the global financial crisis and the 14th consecutive increase .
Heading into the decision, interest-rate futures had priced in a 31 basis point increase, underscoring the difficult decision the central bank had in choosing between a quarter-point and half-point move.
The decision was made by a 6-to-3 vote, with two calling for a half-point hike and one for no change at all.
U.K. inflation in June slowed to 7.9% year-over-year. The Bank of England said inflation will fall to around 5% by the end of the year, accounted for by lower energy, and to a lesser degree, food and core goods price inflation.
It said risks around the inflation forecast are skewed to the upside, albeit by less than in May, reflecting the possibility that the second-round effects of external cost shocks on inflation in wages and domestic prices take longer to unwind than they did to emerge.
In the simultaneously released minutes, the Bank of England conditioned further increases as an “if.”
“If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required,” the bank said.
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