On 3 February, the Bank of England’s Monetary Policy Committee (MPC) voted by a majority of five to four to raise Bank Rate by 0.25 percentage points, with four members preferring a larger 0.50 percentage point increase. However, December’s headline inflation figure, at 5.4%, was around a percentage point higher than had been expected back in November, when the Bank last published its Monetary Policy Report. In a sense, this week’s move represents a loosening of monetary policy over the past three months, with the nominal interest rate rising by less than inflation, implying a fall in the real rate of interest.

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