Bank Of England Hikes Rates In First Back-To-Back Rise Since 2004

• The Bank of England (BoE) on Thursday imposed back-to-back interest rate hikes for the first time since 2004 and began the process of quantitative tightening. 
• Markets had broadly expected the 25 basis point rate increase, which the Monetary Policy Committee voted for 5-4 and which takes the main Bank Rate to 0.5%, as the central bank strives to contain soaring inflation. Four members voted to increase rates by 50 basis points to 0.75%. 
• The Bank fired the starting gun on rate rises in December, hiking its main interest rate to 0.25% from its historic low of 0.1%. Since then, data has shown U.K. inflation soared to a 30-year high in December as higher energy costs, resurgent demand and supply chain issues continued to drive up consumer prices. 
• The BoE on Thursday also raised its inflation forecast to an April peak of 7.25% from the 6% projected in its December report. 
• The BoE stuck with past guidance to the market to expect quantitative tightening once the Bank Rate reached 0.5%, reducing its government and corporate bond purchase target by ceasing to reinvest maturing assets. A program of corporate bond sales is set to be completed no earlier than late 2023, which would fully unwind the central bank’s stock of corporate bond purchases. 
• In its report, the MPC said any further tightening of monetary policy will depend on the medium-term prospects for inflation.

(Source: CNBC News)