With the economy on the brink of recession but inflation sticky at 8.7% and upward pressure with a second round of effects, the Monetary Policy Committee (MPC) of british bank has decided to raise interest rates in the pound area by half a percentage pointfrom 4.5% to 5%, double the analyst estimate.

in your meetingThe MPC voted a 7 to 2 majority supporting a 50 basis point increase in bank interest rates, although two members prefer to keep the UK benchmark rate at 4.5% for now.

The central bank noted in its statement that yields on government bonds have risen sharplyespecially in the shorter maturities, “which now indicates a path for 5.5% interest rate”, that is, it indicates that it will continue to raise interest rates in future meetings.

Regarding the economic outlook, the BoE cites a business survey showing quarterly GDP growth of around 0.25% over the middle of this year. That Inflation in May was 8.7% in the general index, the same as in Aprilbut the underlying rate rose three-tenths, up 7.1%.

“CPI inflation is expected to continue to fall significantly this year, mainly reflecting developments in energy prices. Energy prices are also expected to further reduce inflation. However, there is still a lot of uncertainty surrounding the outlook for domestic energy prices.a”, the BoE noted.

“The household expenditure indicator tends to strengthen somewhat. Employment according to the Labor Force Survey (LFS) increased by 0.8% in the three months to April, more than expected at the time of the May Report. Accompanying this solid job growth is a further reduction in inactivity rates.