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Bank of England hikes rates for the fifth time in a row as inflation soars

Bank of England Governor Andrew Bailey has said he is not at all happy with rising inflation, but that the central bank couldn’t have done anything differently to avoid it.
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LONDON — The Bank of England on Thursday implemented a fifth consecutive hike to interest rates as it looks to rein in soaring inflation.

The Monetary Policy Committee voted 6-3 to increase the Bank Rate by 25 basis points to 1.25%, with the three dissenting members voting for a 50 basis point hike to 1.5%.

The Bank faces the unenviable task of bringing consumer prices back under control against a backdrop of slowing growth and a rapidly depreciating currency, while the U.K. faces a major cost of living crisis.

At its May meeting, the Bank raised its base rate by 25 basis points to 1%, its highest level for 13 years, but warned that the British economy risks falling into recession.

Since then, fresh data has shown that U.K. inflation soared to a 40-year high of 9% annually in April as food and energy prices spiraled, and the country faces a major cost of living crisis. The Bank expects inflation to rise above 10% later this year.

The economy unexpectedly shrank by 0.3% in April after a 0.1% contraction in March, the first back-to-back declines since April and March 2020, and the OECD has forecast that the U.K. will be the weakest G-7 economy next year as higher interest rates, tax rises, reduced trade and spiraling food and energy prices hammer households.

This is a breaking news story, please check back later for more.

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