Interest rates raised for 11th time to 4.25%

The Bank of England has raised interest rates for the 11th time to hit a near 15-year high.

The Monetary Policy Committee (MPC) voted 7-2 to increase rates by 0.25 percentage points to 4.25%. The two dissenting members wanted to keep the rate unchanged.

The MPC says whilst there have been “large and volatile moves in global financial markets in particular since the failure of Silicon Valley Bank and in the run-up to UBS’s purchase of Credit Suisse” which could have broader impacts, it has been briefed by the Financial Policy Committee (FPC) who say the “UK banking system remains resilient”.

The FPC judges that the UK banking system “maintains robust capital and strong liquidity positions”, and is well placed to continue supporting the economy, including in a period of higher interest rates.

As bank wholesale funding costs have risen, the MPC promises to monitor closely any effects on the credit conditions faced by households and businesses, and the impact on the macroeconomic and inflation outlook.

UK rates are now at its highest since October 2008 during the financial crisis. The announcement comes after the US central bank raised interest rates on Wednesday by 0.25% to 5%, despite the turmoil US banks have faced in recent weeks.

The MPC expects global growth to be stronger than predicted in February’s report, with wholesale gas and oil prices falling materially.