The Bank of England has increased interest rates by a quarter of a percentage to 4.25 percent, despite the turmoil that has engulfed banking in recent weeks.
The rise, which was in line with economists’ forecasts, came a day after the latest data showed that the annual inflation rate rose from 10.1 percent to 10.4 percent in February.
This is the 11th consecutive increase from the Bank of England, which began raising rates in December 2021.
The BoE said that UK banks are “resilient” and “well placed to continue to support the economy in a range of economic scenarios, including in periods of higher interest rates”.
The monetary policy committee also pointed to an improved outlook for economic growth and inflation since its last meeting in February.
Seven of its nine members voted in favor of the increase, arguing that the country’s stronger GDP and employment prospects could “strengthen the persistence of higher costs in consumer prices”.
But the BoE said it would “closely monitor” any effect of market tensions on credit conditions facing households and businesses.
The European Central Bank and the US Federal Reserve have raised interest rates in the past week, despite turmoil in the banking sector, which was partly eased by tighter monetary policy.
The pound edged higher against the dollar after the BoE announcement, extending earlier gains to trade 0.5 percent higher on the day at $1.2323.
Gilt yields also moved marginally higher, with interest rate sensitive two-year yields up by 0.02 percentage points to 3.38 percent.