Enlarge image
Main building of the British central bank in London
Photo: ANDY RAIN/EPA
The British central bank has further tightened its monetary policy.
The Bank of England announced that interest rates would rise by 0.25 percentage points to 1.0 percent on Thursday after the MPC monetary policy committee meeting in London.
Analysts had expected the move with a large majority.
After the fourth interest rate hike in the corona pandemic, the key interest rate in the UK is as high as it was last in 2009. The monetary authorities made an initial tightening at the end of last year, with further steps following in February and March.
The background to the tighter monetary policy in Great Britain is high inflation.
It had recently risen to seven percent in the United Kingdom and is thus well above the central bank's medium-term target of two percent.
Leap in interest rates in the US
The Bank of England joins the growing ranks of central banks that are raising interest rates.
In view of the rapidly rising prices in the USA, the US Federal Reserve recently raised the key interest rate more than it had in more than 20 years.
The currency watchdogs around Fed boss Jerome Powell decided unanimously to increase the rate by half a percentage point to the new range of 0.75 to 1.00 percent.
Experts had expected this step after the central bank had initiated the turnaround in interest rates in March with an increase of a quarter of a percentage point.
Experts are expecting a series of further strong increases in the coming months.
The inflation rate in the US reached 8.5 percent in March, the highest level in more than 40 years.
This reduces the purchasing power of consumers, which can set off a dangerous wage-price spiral.
The Fed is therefore under pressure to tighten the reins further.
As a further measure, the US Federal Reserve wants to quickly reduce its balance sheet, which has inflated to almost nine trillion as a result of the corona crisis.
Starting in June, a total of $47.5 billion worth of expiring assets will not be renewed each month, the central bank announced.
By September, the monthly total is expected to increase to $95 billion per month.
This withdraws liquidity from the financial markets.
beb/dpa