Bank of England Raises Rates To 1% Despite Looming Recession Risk

• The Bank of England raised interest rates to their highest since 2009 at 1% on Thursday to counter inflation now heading above 10%, even as it sent a warning that Britain risks falling into recession. 
• The BoE's nine rate-setters voted 6-3 for the quarter-point rise from 0.75%. But Catherine Mann, Jonathan Haskel and Michael Saunders called for a bigger increase to 1.25% to stamp out the risk of the inflation surge getting embedded in the economy. 
• Central banks around the world are scrambling to cope with the surge in inflation that they once described as transitory when it began with the reopening of the global economy before Russia's invasion of Ukraine sent energy prices spiralling. 
• The BoE said it was also worried about the impact of China's COVID-19 lockdown policies which threaten to hit supply chains again and add to the inflation pressure. 
• The BoE's move represented its fourth consecutive rate hike since December - the fastest increase in borrowing costs in 25 years - and it hardened its message about further increases, despite its worries about a sharp economic slowdown. 
• The BoE said most policymakers believed "some degree of further tightening in monetary policy may still be appropriate in the coming months".

(Source: Reuters)