British central bank raises interest rates for the first time in 3 years

Dec. 16 (UPI) -- For the first time in years, the Bank of England voted on Thursday to raise interest rates -- as a measure to stabilize the British economy amid a COVID-19 resurgence.

Faced with rising inflation and concerns about the Omicron coronavirus variant, members of the bank's monetary committee said the central bank couldn't afford to wait until 2022 to make the increase to 0.25%.

Britain's is the first central bank of the world's leading economies to raise interest rates since the start of the pandemic in early 2020.

The International Monetary Fund had pushed the Bank of England to raise rates after inflation showed a 5.1% increase in November, well above its target goal of 2%.

The bank last hiked rates in August 2018, to 0.75% before subsequently slashing them twice during the pandemic.

Committee members noted that one particular concern they discussed was the economic risk of Omicron's possible resistance to at least some COVID-19 vaccines.

"[The Monetary Policy Committee] voted by a majority of 8-1 to increase Bank Rate by 0.15 percentage points, to 0.25%," the central bank said in a statement.

"The [Omicron] variant appears to be much more transmissible than the Delta variant and, on the basis of current knowledge, poses new risks to public health. Global risky asset prices fell in response to this news but have since largely recovered."

A man sells Turkish flags next to a currency exchange office in Istanbul, Turkey, on December 2. The lira has lost about 50% of its value against the U.S. dollar this year. Photo by Sedat Suna/EPA-EFE

In Turkey on Thursday, Ankara's central bank voted the other way -- to cut a key rate from 15% to 14%.

Turkey's currency, the lira, has fallen to a record low compared to the U.S. dollar.

Although inflation in Turkey has risen substantially, President Recep Tayyip Erdogan had repeatedly declined to increase rates, which is typically one of the most often-used methods to control rising prices. The lira has lost about 50% of its value against the dollar in 2021.