The Bank of England (BoE) has raised interest rates from 4.25 percent to 4.5 percent marking their highest level in almost 15 years.
It’s the bank’s 12th consecutive rate hike and a peak since October 2008.
Governor Andrew Bailey said the BoE is now forecasting “modest but positive growth” instead of a “shallow but long recession” predicted six months ago.
He also signalled that further increases will come if there is a wage-price spiral.
It comes as the UK Consumer Prices Index (CPI) inflation remained above 10 percent in March, 0.8 percentage points higher than the BoE’s prediction in February. Food prices were particularly high, 19.2 percent higher than the same month last year.
Seven of the Monetary Policy Committee (MPC) members voted to increase the bank rate to 4.5 percent, owing to “repeated surprises about the resilience of demand” and concerns over a potential wage-price spiral.
Two members preferred to maintain the rate at 4.35 percent as the CPI inflation rate was expected to come down and the effect of previous rate increases is still feeding through the economy.
Read more: Bank of England Raises Interest Rates to Highest Level Since 2008