Fifth consecutive hike as interest rate raised to 1.25% by Bank of England

The Bank of England has raised interest rates for the fifth time in a row to 1.25% and set the scene to act more “forcefully” ahead because of a mounting inflation threat.

There had been speculation of a more aggressive tightening after the sharpest rate hike since 1994 of 0.75 percentage points was imposed by counterparts at the US central bank last night.

But the UK’s Bank rate was raised by 0.25 percentage points, as financial markets and economists had expected, continuing the gradual increases that began in December last year as the rate of inflation gathered pace.

However, the Bank said on Thursday it was now forecasting that the headline rate of inflation would top 11% in the autumn – a rise of almost 1 percentage point on the figure it had expected just last month to see at the year’s end.