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Ekonomické zprávy

BoE raises its Bank Rate by 50 basis points to 4.00%, as widely anticipated

The Bank of England (BoE) unveiled on Thursday its Monetary Policy Committee (MPC) voted by a majority of 7-2 to hike the Bank Rate from 3.50 percent to 4.00 percent at its first meeting in 2023. Most economists had anticipated an increase of 50 basis points in the BoE’s key interest rate. Of the minority, two members preferred to keep the Bank Rate unchanged at 3.50 percent.

In its statement, the BoE notes:

- Global consumer price inflation remains high, although it is likely to have peaked across many advanced economies, including in UK;

- UK domestic inflationary pressures have been firmer than expected;

- UK labour market remains tight by historical standards, although it has started to loosen and some survey indicators of wage growth have eased;

- Near-term data developments will be crucial in assessing how quickly and to what extent external and domestic inflationary pressures will abate;

- MPC’s updated projections show CPI inflation falling back sharply from its current very elevated level. Annual CPI inflation is expected to fall to around 4% towards the end of this year;

- Committee continues to judge that the risks to inflation are skewed significantly to the upside;

- Labour market remains tight and domestic price and wage pressures have been stronger than expected, suggesting risks of greater persistence in underlying inflation;

- Extent to which domestic inflationary pressures ease will depend on the evolution of the economy, including the impact of the significant increases in Bank Rate so far;

-There are considerable uncertainties around the outlook;

- MPC will continue to monitor closely indications of persistent inflationary pressures. If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required;

- MPC will adjust Bank Rate as necessary to return inflation to the 2% target sustainably in the medium term, in line with its remit

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