Bank raises rates near 6-year high

Interest rates hit their highest level in nearly six years on Thursday after the Bank of England stunned markets by raising interest rates to 5.25 percent, the third quarter-point hike since August.

Wrongfooted analysts immediately wondered whether policymakers knew something they didn’t.

Perhaps figures due to be published next week, but already seen by the Bank, would show inflation exceeding three percent, forcing a letter of explanation to the government.

The central bank is clearly worried. It blamed an economy pushing the envelope for rising price pressures and said inflation would rise even further before easing back towards the 2.0 percent target.

Economists said further interest rate increases could lie ahead and futures markets quickly moved to reflect the possibility of two more hikes before the year was out.

Bank raises rates near 6-year high | Top News | Reuters.co.uk

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