UK Interest Rate Raised to a 14-year High

The Bank of England raised the UK's interest rate (also known as Bank Rate) today for the eleventh consecutive time, to 4.25 percent. The move, an increase of 0.25 points from the rate last risen on Feb. 2, 2023, was widely expected after the UK's Office for National Statistics shock announcement yesterday that inflation had increased in February from 10.1 to 10.4 percent - .5 points above the forecast 9.9 percent. This latest rate hike sends the UK's interest rate to a level last seen almost 15 years ago.

On the potential impact the raise will have on inflation, the Bank of England said in its press release announcing the increase: "The extent to which domestic inflationary pressures ease will depend on the evolution of the economy, including the impact of the significant increases in Bank Rate so far", going on to warn that "uncertainties around the financial and economic outlook have risen."

Looking forward, the Bank of England restated its goal to "adjust Bank Rate as necessary to return inflation to the 2% target sustainably in the medium term". The next interest rate decision is due on May 11, 2023.