The Bank of England’s Monetary Policy Committee today voted to raise UK interest rates by 0.25% to 4.75%.
Today’s rise is the first since 10 June 2004, when interest rates rose 0.25% to 4.5%.
The Bank said on its website: “Output growth has been robust and business surveys point to continued expansion. Although the housing market remains buoyant, there are now signs that it is starting to ease, and the growth of consumption may be moderating.
“Investment and public sector consumption have both grown strongly and demand in UK export markets continues to pick up.
“Consumer Price Index (CPI) inflation reached 1.6% in June. It is likely to fall back in the near term, but underlying cost pressures have risen. With demand already high relative to the supply capacity of the economy, continued strong growth is likely to lead to rising inflationary pressures.
“Against that background, the Committee judged that an increase of 0.25 percentage points to 4.75% was necessary to keep CPI inflation on track to meet the 2% target in the medium term.”
The Committee’s latest inflation and output projections will appear in the Inflation Report to be published on Wednesday 11 August.
References: EGi News 05/08/04
