London [UK], May 11 : Bank of England's monetary policy committee hiked key interest rates by 25 basis points (100 basis points is equal to one percentage point) to 4.5 per cent, the highest in over a decade or so.
At its latest monetary policy meeting held this week, the members voted by a majority of 7-2 to increase the interest rates in the continued fight against inflation.
The Bank of England sets monetary policy to meet the 2 per cent inflation target, and in a way that helps to sustain growth and employment.
Consumer price inflation in the UK was well above the two per cent target at 10.2 per cent in January-March 2023, higher than expected at the time of the February and March monetary policy meetings.
"Inflation is too high. It's been around 10% since last summer. Higher energy and goods prices are the main reasons why inflation is well above our 2 per cent target," the Bank of England said while hiking interest rates.
"We've put up interest rates to make sure inflation falls and stays low. Raising interest rates is the best way we have to bring inflation down."
Bank of England expects inflation to fall quickly this year, and said "it's our job to make sure that inflation returns to our 2 per cent target. Low and stable inflation is vital for a healthy economy."
Raising interest rates typically help in cooling demand in the economy and thus helps in managing inflation or vice versa.
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