After Fed, Bank of England also hikes rates
STORY: The Bank of England raised rates Thursday (June 16) for the fifth time since December.
Its benchmark rate went up by a quarter of a percentage point to 1.25%, its highest level since early 2009.
Some analysts had expected more, following a three-quarter percentage point increase by the U.S. Federal Reserve the day before.
Instead, the BoE stuck to a gradual approach, but warned that it was ready to act “forcefully” to stamp out inflation.
Central banks around the world are racing to cool price rises.
In the UK, they are forecast to exceed 10% later this year, partly thanks to soaring energy costs.
Last month bank governor Andrew Bailey said consumers needed to brace for impact:
“I’m afraid the one that I’m going to sound rather apocalyptic about is food.”
But Bailey has to tread carefully, with policymakers also worried about triggering a recession.
The UK economy is already showing signs of a slowdown, and is forecast to be among the weakest of rich countries next year.
Even so, traders bet that more rate hikes are on the way.
Markets are pricing in a rate of almost 3% as soon as December.
Earlier Thursday, the Swiss National Bank shocked markets with its first rate hike since 2007.
Stocks tumbled following the news.
Analysts said it was telling that one of the most dovish of central banks was now worried about inflation.
Europe’s Stoxx 600 index was down over two percent by lunchtime, following the two rate hikes.
