The Bank of England announced it raised its key interest rates to 1 percent on Thursday, reaching the highest level in 13 years. The bank also said that inflation is expected to exceed 10 percent this year.
The Monetary Policy Committee voted 6-3 to increase the rate. All three members who voted against the proposal preferred to raise it even higher to 1.25%, the bank said.
At the same time, the key interest rate may reach 2.5 percent by the second quarter of 2023, UK authorities say. The BoE's move comes after the US Federal Reserve also increased interest rates by 0.5%, constituting the biggest raise in 20 years.
A cashier displays multiple denomination US dollar and British pound Sterling bank notes
© AFP 2023 / NIKLAS HALLE'N
The interest rates were raised in the UK after many Britons suffered from skyrocketing energy bills. The perturbations in the fuel market came after Washington, London and Brussels imposed sanctions against Moscow, citing the special military op in Ukraine.
In response, Russia announced it would only trade gas for rubles, which created a split among Europeans, with many countries saying they won't be able to switch away from Russian fuel.