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Bank of England hikes key interest rate to highest level in 13 years

By Ashley Williams
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Bank of England hikes key interest rate to highest level in 13 years
In its announcement, the Bank of England said that its move was influenced by several factors, including the Russian war in Ukraine and COVID-19. File Photo by Andy Rain/EPA-EFE

May 5 (UPI) -- Rising inflation led Britain's central bank on Thursday to order another interest rate hike, taking it to the highest level in almost 15 years.

The Bank of England ordered a quarter-point key rate increase at the end of its policy meeting. Thursday was the fourth time since December that the bank has ordered a hike -- and the increase took the rate to 1%, its highest level since 2009.

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The central bank voted 6-3 for the hike, which it hopes will get a handle on rising prices across Britain. Inflation in British markets is running at its highest level in about 30 years.

In its announcement, the bank said that its move was influenced by several factors, including the Russian war in Ukraine and COVID-19.

"Global inflationary pressures have intensified sharply following Russia's invasion of Ukraine," it said in a statement. "This has led to a material deterioration in the outlook for world and U.K. growth.

Inflation in Britain is running at the highest level in about 30 years and is partly being driven by rising energy prices. File Photo by Andy Rain/EPA-EFE
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"Concerns about further supply chain disruption have also risen, both due to Russia's invasion of Ukraine and to COVID-19 developments in China."

Some British lawmakers on Thursday cautioned that the bank's modest increase would have a significant and "unfair' impact on some London homeowners, and some are calling for an emergency mortgage fund to help overburdened Britons.

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The three who voted against Thursday's quarter-point hike thought it wasn't sufficient. They wanted a larger increase -- similar to that ordered by the U.S. central bank on Wednesday.

The U.S. Federal Reserve hiked key interest rates by a half-point in a more potent effort to get control of rising inflation, which has risen over the past year by its largest amount since the early 1980s.

In both the United States and Britain, experts say that soaring energy prices are the main drivers for the ballooning inflation.

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