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Bank of England raises rates by quarter point as pound reaches post-Brexit high
Developing story first seen 3 hours ago
The Bank of England has raised interest rates by a quarter of a percentage point, with eight of its nine policymakers backing the move. The decision reflects concern that higher energy prices will feed through into inflation, while the pound has reached its highest level since the Brexit vote.
The dissenting member, Catherine L Mann, wanted a larger, half-point increase, citing risks that high food and energy costs could shape wage demands and prolong inflation. The committee said evidence of these second-round effects remained limited but would need close monitoring; UK inflation was 3.5% in September.
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In short
- Bank Rate rose by a quarter point.
- Eight policymakers backed the increase.
- Catherine L Mann called for a half-point rise.
How this story developed
- 17 minutes ago The dissent came from Catherine L Mann, who favoured a half-point rise, arguing that persistent food and energy costs could fuel wage demands and inflation, while the committee said evidence of such effects remained limited.
- 27 minutes ago The Bank of England raised interest rates by a quarter-point, with eight of nine policymakers supporting the move as UK inflation stood at 3.5% and energy costs threatened to drive prices higher.
Full account
The pound reached its strongest level against a basket of currencies since the day of the Brexit referendum, according to Bank of England figures released on Thursday. Its sterling effective exchange rate index stood at 86.5372 on Wednesday, a level last seen on 23 June 2016. The measure reflects sterling’s value against several currencies rather than its exchange rate with the US dollar alone.
Sterling’s rise followed a broad fall in the dollar after the US midterm elections. Investors also appeared reassured that the results were not disputed. Analysts said the prospect of a divided US government could make major tax cuts or spending measures harder to enact. The pound’s recent gains against the euro and the yen contributed to the index’s rise. Expectations that the Bank of England would raise interest rates at midday on Thursday also supported sterling, as higher rates can make assets held in pounds more attractive.
The index uses January 2005 as a base of 100. It stood at 87.9248 on the day of the EU referendum before falling to 84.441 the following day, as the vote to leave the bloc unsettled currency markets. It later dropped to 73.1 on 23 March 2020, during the early stages of the Covid pandemic. Thursday’s reading therefore marks a recovery in sterling’s value against its currency basket, though it remains below its level on referendum day.
In Thursday morning trading, the pound was little changed against the dollar at about $1.3463, after gaining more than half a cent on Wednesday. It eased slightly against the euro to around €1.1985, having briefly exceeded €1.20 in late October. European shares also rose, following gains in US markets: the FTSE 100 and Germany’s Dax were each up about 0.6%, while France’s Cac 40 gained about 0.8%. The currency and share moves indicate an initially positive market response, although their longer-term direction remains uncertain.
Where outlets differ
From the full account, which is AI-written from the sources:
Both reports centre on the Bank of England’s currency index and the expected interest-rate decision. Source 2 adds Thursday’s dollar and euro exchange rates, European share-market moves and more detail on investors’ reaction to the US election. Source 1 describes the dollar’s fall more generally. Both print ‘24 June 2026’ for the post-referendum index reading; the surrounding chronology indicates that 24 June 2016 was intended.
Left-leaning outlets 2
- Bank of England raises rates by quarter point as pound reaches post-Brexit highThe Guardian
- Pound hits highest level since its crash after 2016 Brexit voteThe Guardian
Only here: pound, brexit, raises, quarter, point
Right-leaning outlets 1
Only here: hikes, interest, four, cent, unanimous
Every side used: bank, england, rates, vote
Headline columns compared word for word; nothing in them is AI-written.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Raising rates could help keep inflation expectations anchored and prevent higher energy costs from feeding into wider price and wage increases. Supporters may argue that acting now, even if the effect on demand is modest, helps protect the pound’s purchasing power and the Bank’s credibility.
The case against
With the economy not overheating, raising rates risks weakening activity without doing much to reduce energy-driven inflation, which is largely outside the Bank’s control. Critics may argue that higher borrowing costs would burden households and businesses, while waiting for clearer evidence of persistent wider price pressures could avoid unnecessary damage.
Explained simply
The Bank of England sets Bank Rate, which influences the cost of borrowing and the interest paid on savings. It uses changes to the rate to help keep inflation—the pace at which prices rise—close to its 2% target.
Higher energy costs can feed through to household bills and the prices businesses charge. Raising rates can dampen spending and borrowing, but can also make mortgages and other loans more expensive; the effect on the wider economy can take time.
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Originally published by The Guardian as “Pound hits highest level since Brexit vote, with Bank of England expected to raise interest rates today – business live”.