The Bank of England has raised interest rates for the first time since the start of the coronavirus pandemic despite mounting concern over the Omicron variant.
Threadneedle Street’s monetary policy committee (MPC) voted to raise rates from the historic low of 0.1% to 0.25%, judging that pressure from surging inflation outweighed the risks to the economy from the new variant.
Official figures showed inflation hit 5.1% in November amid soaring energy prices and global supply chain bottlenecks, hitting a rate the Bank hadn’t expected to be reached until the spring. The MPC has an official inflation target of 2%.
However, the rate rise comes amid a severe deterioration in the economic outlook as the Omicron variant triggers a collapse in consumer confidence and leads to a wave of cancellations for hospitality businesses during the key festive trading period.
Source: The Guardian