The Bank of England has raised its key interest rate by 25 basis points and says it no longer expects an economic recession in the United Kingdom (U.K.) this year.
The Monetary Policy Committee voted 7-2 in favor of the quarter percentage point rate hike, which takes the country’s Bank Rate to 4.50%.
The interest rate increase comes as headline inflation rose by an annualized 10.1% in March of this year, driven by higher costs for food and energy.
Core inflation, which excludes volatile food and energy prices, rose by 5.7% in March from a year earlier.
In its accompanying Monetary Policy Report, the central bank updated its growth and inflation forecasts, saying that it no longer expects the U.K. economy to enter a recession this year.
The British economy has shown resilience in fending off a recession, with falling energy costs and a fiscal boost announced in the government’s latest budget improving the economic outlook across the U.K.
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