London: The Bank of England has raised interest rates to combat surging consumer prices, becoming the first central bank among the world’s leading economies to do so since the coronavirus pandemic began.
The move Thursday is likely to make mortgages and loans more costly. The bank increased its main interest rate from a record low of 0.1% to 0.25% to rein in rising inflation stemming from high energy costs, labor shortages and other factors as the global economy recovers from the pandemic.
It was somewhat of a surprise because of the huge economic uncertainties surrounding the spread of the omicron variant of the coronavirus.
The Bank of England’s decision comes a day after the U.S. Federal Reserve announced it would speed up its tightening of credit as inflation reached a 40-year high in November.
In contrast, the European Central Bank is expected to sound a note of caution as it also meets Thursday.