Bank of England hikes rates again but softens pace as inflation eases

Britain's central bank on Thursday raised its key interest rate again but toned down the pace as inflation shows signs of easing, mirroring action by the US Federal Reserve and ahead of an anticipated identical move by European policymakers.

The Bank of England raised the benchmark rate by half a percentage point, to 3.5 per cent, the highest level in 14 years. It was the ninth consecutive increase since December 2021 and follows last month's outsized three-quarter point hike, the biggest in 30 years.

This time, officials opted for less aggressive action after data this week showed inflation slipped from a 41-year high, but they warned that more hikes are likely to come.

The bank last month forecast a prolonged recession in the UK and consumer price inflation staying very high in the near term. Should that scenario play out, further rate increases may be required for a sustainable return of inflation" to its 2 per cent target, bank's Monetary Policy Committee said.

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