Bank of England hikes interest rate for the first time since Iran war, warns inflation will near 5%

The Bank of England announced its first interest rate hike in over three years on Thursday, as it raised its key rate by 25 basis points to 4%.

The widely anticipated move marked the bank's first hike since Aug. 2023, and made it the last major central bank to embark on a tightening cycle since the U.S. and Israel went to war with Iran eight months ago.

Ahead of the decision being announced, markets had been pricing in more than a 99% chance of a rate hike, according to LSEG data. Traders were also pricing in a one-in-four chance of a further hike in December.

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