Bank of England raises rates to 4.5% and sees slow inflation fall

The Bank of England raised its key interest rate by a quarter of a percentage point to 4.5% on May 11, taking borrowing costs to their highest since 2008 with its 12th consecutive rate rise, as it seeks to curb the fastest inflation of any major economy, Report informs referring to Reuters.

The central bank no longer predicts a recession after it revised up its growth forecasts from gloomy numbers released in February, the biggest such improvement since it first published forecasts in 1997.

But it also now expects inflation to be slower to fall than it had hoped, mostly due to unexpectedly big and persistent rises in food prices.

"If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required," the BoE said, retaining the same guidance on future actions that it had in February and March.

The pound rose almost half a cent against the US dollar, topping $1.26, while British government bond yields jumped in response to the BoE's move.