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London's Oxford Street is a central shopping area.
The main interest rate was raised by the central bank for the first time in three and a half years on Thursday to combat a surge in inflation.
Policymakers voted to raise the bank's interest rate by 15 basis points. The rate had been at 0.1 percent since the beginning of the Pandemic in March 2020.
The Bank of England became the first major central bank to raise interest rates when it did so in October. The policymakers voted for a rate increase in December, compared with just two in November. The pound gained more than 1 percent against the U.S. dollar after the announcement.
According to the minutes of the central bank's meeting, policymakers said there was some value in waiting for further information on the degree to which Omicron was likely to escape the protection of current vaccines and on the initial economic effects of this new wave. There was a strong case for tightening monetary policy now because of the strength on inflationary pressures in the economy.
England's chief medical official warned that more records would be broken after Britain set a record for the number of coronaviruses cases. Major restrictions on businesses and social life have been resisted by the government, instead focusing on speeding up the roll out of booster vaccines and encouraging people to work from home. Christmas parties are being canceled in droves, gyms are asking for more government support, and people are retreating back into their homes.
The Bank of England was worried that the virus surge would delay their efforts to get interest rates off the ground.
The Bank of England is not the only one trying to deal with high levels of inflation. In the United States, prices are increasing at a faster rate than in the past.
The Federal Reserve said on Wednesday that it would reduce its bond-buying program by more than it had previously said. Inflation in the eurozone is the highest it's ever been since the creation of the common currency, but the European Central Bank is more concerned about medium-term inflation forecasts which are still below its 2 percent target.
Financial markets were surprised by the central bank not raising interest rates after policymakers signaled that high inflation was a concern. They said at the time that they would wait for more information on the effect of the end of the government-funded furlough program on unemployment. In the coming months, a rate increase is likely to be necessary.
The data shows an increase in payrolls, a decline in the unemployment rate and record levels of job vacancies. Inflation has sped away from policymakers' expectations, increasing the pressure to raise rates.
The Office for National Statistics said that the annual inflation rate rose to 5.1 percent last month. The central bank predicted last month that inflation would peak at 5 percent in April. The bank updated its projections on Thursday. Inflation would stay around 5 percent through most of the winter and peak at 6 percent in April.
