The Bank of England is drastically raising the cost of borrowing money in an effort to contain spiralling inflation
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The Bank of England, the equivalent of the Federal Reserve in the United States, has increased interest rates at their fastest rate in 33 years.
The bank rate, or the price of borrowing money, increased by 0.75 per cent to 3 per cent at the Bank of England. The Monetary Policy Committee (MPC) reports that the Bank of England decided to raise interest rates to 3 per cent by a vote of 7-2.
High, double-digit inflation is a problem in the United Kingdom. Recent months have seen little improvement in the economy. For the second time in three months, the UK saw inflation of 10.1 per cent in October.
In the UK, the MPC is in charge of deciding on the official interest rate. Its report stated:
“Inflation is too high. It is well above our 2% target. It’s our job to make sure that inflation returns to our 2% target.”