Monetary Policy Committee, Catherine L Mann, said - during a Bank of England webinar at the end of April - "monetary policy needs to keep inflation expectations anchored; by doing so now, less tightening will be required later, when demand may still be weak".
The move was not unanimous - 6 members voted for the increase to 1.0%, while 3 members voted for a higher increase to 1.25%. The Committee cited higher goods and energy prices, Russia's invasion of Ukraine affecting prices, and Covid as influences on rising inflation- in March, prices has risen by 7% compared to the previous year, much higher than the Bank of England's 2.0% target.
The Committee has indicated it also intends to consider the process of selling UK government bonds, although it affirmed that any sales would be done based on economic circumstance and in a gradual manner, with a further update on its proposed strategy to be given in August meeting minutes. "The Bank of England can’t do anything about the global supply problems or the energy prices that are currently pushing up inflation." "But we do have tools to make sure inflation comes back down to our 2% target. The main tool we use to bring inflation down is to increase interest rates."
"We raised the UK’s most important interest rate (Bank Rate) from 0.1% to 0.25% in December 2021, to 0.5% in February 2022, and then again to 0.75% in March."
This month we have raised Bank Rate to 1%. We expect inflation to fall back next year and be close to our target in around two years. We may need to increase interest rates further in the coming months. But that all depends on what happens in the economy. In particular, we will be watching closely what is likely to happen to the rate of inflation in the next year or two.