Bank of England Raises Base Rate to 5%, Aiming to Curb Inflation

In an unexpected move, the Bank of England has increased its base rate from 4.5% to 5%. This decision comes as the thirteenth consecutive increase by the bank and marks the highest it has been since 2008.

The increase exceeded most predictions, underscoring the bank's aggressive stance towards managing the country's economy. This decisive action is seen as an attempt to control rising inflation by reducing disposable income for mortgage-holders, hence curbing their spending.

The decision was not unanimous. Of the nine members on the committee, seven voted in favour of the hike, while two opposed it, preferring to maintain the status quo.

This move comes in light of recent inflation figures which have remained stubbornly high at 8.7% in May. Inflation, a measure of the rate of price increases, has proven to be a sticky issue for the economy.

However, there seems to be a light at the end of the tunnel. The Bank of England's governor has expressed optimism about the future, forecasting a significant reduction in inflation within the year. The increase in the base rate is certainly an integral part of the bank's broader strategy to ensure that this prediction becomes a reality.

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