The decision from the Central Bank was widely anticipated as a means of tackling red-hot inflation, which rose to a 30-year high in December and has put immense pressure on Britain’s households, fuelled by rising energy prices and supply chain issues.
The monetary policy committee voted to increase the benchmark rate from 0.25% to 0.5%, deeming immediate effect to be necessary. In response, the pound climbed to its highest level in two years against the euro and rose 0.4% against the US dollar.
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