Bank of England hikes interest rates by 25 basis points after inflation surprises

LONDON — The Bank of England on Thursday hiked interest rates to their highest level since 2008, as it grapples with persistent high inflation against the backdrop of concerns over the banking system.

The Monetary Policy Committee voted 7-2 in favor of raising the Bank rate by 25 basis points to 4.25%, in a widely anticipated move after official data on Wednesday showed that U.K. inflation unexpectedly jumped to an annual 10.4% in February.

The U.S. Federal Reserve also increased its key rate by 25 basis points on Wednesday and suggested that “some additional policy firming may be appropriate.” It acknowledged the likely impact of recent problems in the banking system.

The Swiss National Bank lifted its own policy rate by 50 basis points to 1.5% on Thursday.

Central banks around the world have been monitoring the fallout from the collapse of U.S.-based Silicon Valley Bank and the emergency rescue of Credit Suisse. The U.K. has remained relatively insulated, while contagion risks have eased in recent days, as analysts largely perceive the individual failures to be one-off incidents.

This is a breaking news story and will be updated shortly.