The Bank of England’s Monetary Policy Committee today voted to raise the base rate by 0.25 percentage points to 4.75 per cent.
This is the first change since August 2005 when the rate came down from 4.75 per cent to 4.5 per cent.
The BoE says: Against the background of firm growth, limited spare capacity, rapid growth of broad money and credit, and with inflation likely to remain above the target for some while, the Committee judged that an increase of 0.25 percentage points in the official Bank rate to 4.75 per cent was necessary to bring inflation back to the target in the medium term.
Abbey chief economist Barry Naisbitt says: “Today’s decision reflected a changing perception within the MPC about the balance of risks on inflation, coming from new economic data.
While the decision to raise rates today was something of a surprise given last month’s unanimous vote to hold, it reflects economic news and, presumably, a revised outlook for inflation.”