Bank of England Raises Interest Rates Back to Pre-Pandemic Level of 0.75%

The Bank of England (BOE) lifted its main bank rate by 25 basis points to a pre-pandemic level of 0.75%, raising the rate for the third consecutive meeting as it battles surging inflation.

• The vote by the U.K. central bank's Monetary Policy Committee (MPC) was 8-1, with Deputy Governor Jon Cunliffe voting to hold rates steady as he expects sharply higher commodity prices will put a big dent in consumer demand. Last month, the vote to raise rates had a slimmer majority at 5-4.
• Policymakers now expect inflation to peak in the second quarter at 8%, up from their previous estimate of 7.25%
• The policy statement, however, leaned dovish, suggesting consensus expectations for the central bank to bring its bank rate to 2% by year end might have gotten ahead themselves. "Some further modest tightening might be appropriate in the coming months, but there were risks on both sides of that judgment depending on how medium-term prospects evolved," the MPC said. That quickly sent the British pound lower by about 1% versus the U.S. dollar and the euro.
• Crypto markets don't appear to be affected, with bitcoin (BTC) continuing to modestly move on both sides of $41,000.

Read more: Bitcoin Isn't an Inflation Hedge Yet, but Here's How It Could Be