LONDON (Reuters) – The Bank of England (BoE) raised its benchmark rate by a quarter point on Thursday and said it expects price increases to subside faster than before, despite the unexpected reacceleration inflation last month.

The UK base rate is increased from 4.0% to 4.25%.

The decision was passed by seven votes, with two committee members, Swati Dhingra and Silvana Tenreyro, having voted for a status quo.

The BoE, which is trying to reconcile a weak economic outlook and concerns about banks with persistently high inflation, maintained the message that its committee saw little urgency in continuing to forcefully raise rates.

“The monetary policy committee will continue to closely monitor signs of continued inflationary pressures, including tightening labor market conditions and developments in wage growth and services inflation,” the Commission said. central bank in a statement.

“If there were to be evidence of more persistent pressures, further tightening of monetary policy would be required,” she added.

The institution estimates that inflation in the United Kingdom is on the way to falling sharply between April and June, despite the surprise reacceleration to 10.4% in February.

Second-quarter price growth is expected to be lower than the BoE’s forecast of last month, after Finance Minister Jeremy Hunt announced an extension of subsidies for households and lower oil prices. energy, the BoE said.

In reaction to the recent turmoil in the financial world, the issuing institution judged the British banking system to be resilient.

“The Financial Policy Committee will continue to closely monitor any effect on credit conditions faced by businesses and households and therefore the impact on the macroeconomic and inflation outlook,” the BoE said.

She expects the measures included in the 2023-24 budget presented by Jeremy Hunt to support a sluggish UK economy, raising the rate of gross domestic product to around 0.3% over the next few years.

GDP is expected to grow slightly in the second quarter of 2023, an improvement from the 0.4% contraction that was anticipated in February for the April-June period.

(William Schomberg and David Milliken, Laetitia Volga, edited by Blandine Hénault and Kate Entringer)

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