The Bank of England raised its key rate by a quarter point, as widely expected, as inflation continues its upward trend on a weaker pound.
The Monetary Policy Committee, headed by Governor Mark Carney, decided to lift the benchmark rate by 25 basis point to 0.50 percent, the bank said in a statement on Thursday. This was the first rate hike since July 2007.
The MPC voted 7-2 to raise the interest rate. Policymakers also voted to maintain the quantitative easing at GBP 435 billion.
Among nine members, Jon Cunliffe and Dave Ramsden voted to keep the rate unchanged at 0.25 percent.
The bank said monetary policy continues to provide significant support to jobs and activity in the current exceptional circumstances.
A majority of members judged that a small reduction in stimulus was warranted at this meeting to return inflation sustainably to the target.
In the Inflation Report, the bank said overall output growth is projected to remain at 0.4 percent in the fourth quarter.
The bank forecast inflation to rise further in the near term, peaking at 3.2 percent in October, before starting to fall back. Inflation is projected to slow to 2.4 percent by the fourth quarter of 2018.
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