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Bank of England raises interest rates to 1% in bid to tame inflation

Rate hike is the third since December as central bank battles soaring cost of living

MPC votes 8-1 in favour of increase, with one member calling for a larger rise

The Bank of England has raised interest rates to 1%, the third increase since December, as it battles to tame soaring inflation. The Monetary Policy Committee (MPC) voted by a majority of 8-1 to increase the Bank's base rate from 0.75% to 1%. One member, Michael Saunders, voted for a larger increase to 1.25%. The decision comes as the UK faces its highest rate of inflation in 30 years, with the Consumer Prices Index (CPI) rising by 5.4% in the 12 months to December 2022. The Bank's target is to keep inflation at 2%. In a statement, the MPC said it was "very likely" that inflation would rise further in the coming months, driven by higher energy prices and the impact of the war in Ukraine. The Committee also said that it was "increasingly concerned" about the risk of inflation becoming more persistent. The Bank's decision to raise interest rates is designed to cool demand in the economy and bring inflation back down to target. Higher interest rates make it more expensive for businesses and consumers to borrow money, which can lead to a slowdown in spending. However, the Bank's decision is also likely to weigh on economic growth. The MPC said that it now expects GDP growth to be 1.25% in 2023, down from its previous forecast of 1.5%. The Bank's decision comes as central banks around the world are raising interest rates in an effort to combat inflation. The US Federal Reserve has raised rates four times since March, and the European Central Bank is expected to raise rates for the first time in over a decade later this year. The Bank of England's decision is a significant step in its fight against inflation. However, it is likely to be a bumpy road ahead, with the Bank facing a difficult balancing act between controlling inflation and supporting economic growth.