The Bank of England (BoE) has hiked interest rates for the third time in four months as inflation continues to soar in the UK.
The Monetary Policy Committee (MPC) announced the rise from 0.5% to 0.75% on Thursday (March 17).
Rates are now at their highest level since before the pandemic.
The committee voted by a majority of 8-1 to increase rates by 0.25 percentage points, with one member – Jon Cunliffe – voting to keep rates at 0.5%.
The MPC condemned Russia's invasion of Ukraine and said the war would “accentuate both the peak in inflation and the adverse impact on activity by intensifying the squeeze on household incomes”.
It also warned that inflation - the increase in price of goods and services in the economy - was likely to to hit 8% in the next few months, up 1% from its February forecasts.
The British Chambers of Commerce (BCC) said the decision by the BoE although expected it was "ill-timed".
Suren Thiru, head of economics, at the BCC, said: “While interest rates remain low by historic standards, the latest rise will be viewed by many as a further step in a prolonged period of aggressive monetary tightening at a time when consumers and businesses are struggling under a myriad of rising cost pressures.
“Higher interest rates will do little to curb the global causes behind this inflationary surge and risk intensifying the headwinds facing the UK economy by damaging confidence and deepening the financial squeeze on consumers and businesses."
The pound declined by 0.35% to 1.187 against the US dollar after the Bank of England confirmed the rates rise.
It lost some of its significant gains against the dollar, which was weakened by its own interest rate hike on Wednesday as it moved down to a 0.2% increase at 1.312, having been as high as 1.316 earlier.
Ed Monk, associate director at Fidelity International, said the rate rise underlined how seriously policymakers were taking inflation, even if they had stopped short of the half-point increase some had predicted.
He said: "The Monetary Policy Committee members will know that some of the most painful price rises being felt by households – such as those on energy, fuel and food – will not be brought under control by raising borrowing costs, but the fact they are acting anyway suggests they are worried about price rises feeding through to higher wages and becoming more ingrained."
Mr Monk added the case for further tightening remained "intact" but the BoE would be watching closely for signs the cost-of-living squeeze was beginning to hurt demand.
“The bank’s commentary around today’s decisions suggests ‘modest’ tightening as the year goes on – which might indicate it is willing to turn more dovish if growth slows," he said.
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