STORY: Turmoil over Credit Suisse and other banks had caused some to doubt it…
But on Thursday (March 23) the Bank of England pressed ahead with rate hikes.
The central bank lifted its benchmark rate by a quarter of a percentage point.
That was its 11th consecutive increase in a sequence going back to December 2021.
In a statement, the bank cited inflationary pressures and a tight jobs market.
But Governor Andrew Bailey said price rises should now cool off pretty rapidly.
That’s despite a surprise jump in the headline rate of inflation to 10.4%.
"We've seen signs of inflation really peaking now, but of course it's far too high. Now we think it's going to come down sharply, really from the early summer onwards. But we haven't seen that happen yet. We had some news this week which was, unfortunately, going a bit the other way. We think there's probably some one-off elements in that. But we need to see it starting to come down progressively and get back to target".
The BoE move follows a similar hike yesterday by the U.S. Federal Reserve, where Chairman Jerome Powell also has his eye on prices:
"We're very focused on getting inflation down, and because we know in the longer run that that is the thing that will most benefit the people we serve.”
While both banks had been widely expected to raise rates, doubts had crept in amid the turmoil over global banking.
On Thursday, the Bank of England said it noted the volatile moves, but was confident the UK banking system remained resilient.
After the Fed indicated it could now pause further increases, the BoE reiterated that it, too, saw less urgency for more hikes.