Bank of England interest rate decision a 'panic move' overshadowed by Covid uncertainty

0.25% rate hike a “watershed” moment

The Bank of England’s decision to increase interest rates to 0.25% on Thursday (16 December) has been criticised as a “panic move” to prevent the UK economy drifting into “more dangerous waters” as Covid cases soar, while the threat of lockdowns and further pandemic uncertainty are set to weigh on growth forecasts going forward.

Defying expectations again, the bank said current economic conditions met the criteria to increase UK interest rates, having recently been accused by the International Monetary Fund of "inaction" over inflation, which is set to peak at around 6% in April next year. In the end, inflation concerns trumped Covid uncertainty and other pressures, leading to the Monetary Policy Committee to vote overwhelmingly in favour of an interest rate hike to 0.25%, with further rate increases on the horizon in 2022. Bank of England surprises markets by hiking rates to 0.25% Shafiq Shabir, head of e...