Bank of England Hikes Rates Again, GBP Reacts Higher
BOE Increases Rates
Bank of England increased interest rates to 0.5% (from 0.25%) as widely expected today, with a thin 5 to 4 majority. Four out of the five members of the Monetary Policy Committee (MPC) wanted a bigger rate hike of 50 bps, to 0.75%, showing more hawkishness. [1]
This is the second straight rate hike, following December's lift-off, which had surprised many investors. Furthermore, December's decision had not been unanimous either, since Ms Tenreyro had opted for maintaining rates.
The bank's actions are mainly driven by high inflation, which is way past the 2% inflation target. Consumer Price Index surged 5.4% year-over-year in December, from 5.1% prior.
Based on November's projections by the BoE, inflation was not expected to reach the 5% region until April, while in December, the bank had said that it expected inflation to peak at 6% in April. Based on today's release it sees even higher inflation, expecting it to peak at 7.25% in April.
The Monetary Policy Committee also voted unanimously to begin to reduce the stock of UK government bond purchases, financed by the issuance of central bank reserves, by ceasing to reinvest maturing assets, as per its August commitment do so when interest rates had risen to 0.5%.
It also reaffimed that it will consider beginning the process of actively selling UK government bonds only once Bank Rate has risen to at least 1%, and depending on economic circumstances at the time.
GBP/USD initial reaction was higher, while markets now turn to Governor Bailey's press conference.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
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| Retrieved 11 Apr 2026 https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2022/february-2022 |
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