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News Item: BoE agrees third straight rate hike as inflation soars

The Bank of England on Thursday hiked its main interest rate to its pre-pandemic level, the third increase in a row, to combat decades-high inflation.

The decision came one day after the US Federal Reserve carried out the first of what is expected to be a number of rate hikes this year to tackle runaway inflation.

The BoE said UK annual inflation could top 8.0 percent this year, having said it would peak at 7.25 percent in April.

Eight members of the bank’s nine-strong Monetary Policy Committee, including governor Andrew Bailey, voted to lift its key rate by a quarter point to 0.75 percent.

Policymaker Jon Cunliffe voted to maintain rates at 0.5 percent, citing worries over the soaring cost of living.

“Regarding inflation, the invasion of Ukraine by Russia has led to further large increases in energy and other commodity prices including food prices,” the BoE said in a statement.

“It is also likely to exacerbate global supply chain disruptions, and has increased the uncertainty around the economic outlook significantly.”

The bank said global inflationary pressures would “strengthen considerably further” over the coming months, meaning that net energy importers including Britain would likely experience slowing growth.