Bank of England raises interest rate to 0.25% to tackle inflation

The Bank of England has raised interest rates for the first time in three years in a bid to tackle UK inflation.

Rates were increased from 0.1% to 0.25% in what the Bank suggested would be the first in a series “modest” rises in the months ahead.

The bank’s Monetary Policy Committee (MPC) voted eight-to-one in favour of the move, which is designed to bring inflation down to the BoE’s 2% target.

The BoE had previously indicated it would wait to gauge the economic impact of the Omicron COVID-19 variant before moving to adjust interest rates.

Yesterday’s 5.1% inflation figure resulted in an urgent call for action from the IMF, however.

“Although the Omicron variant was likely to weigh on near-term activity, its impact on medium-term inflationary pressures was unclear at this stage,” the MPC said in a statement.

In the December issue of AM magazine car retailers from across the UK cited rising wage inflation among a series of issues affecting recruitment in the sector.

This, and the rising number of job vacancies in automotive retail, prompted Marshall Motor Group chief executive, Daksh Gupta, to suggest that OEMs accelerated network cuts to help mitigate against a “staffing crisis”.