The Bank of England raised interest rates for a fifth straight meeting and sent its strongest signal yet that it’s prepared to unleash larger moves if needed to tame inflation. The nine-member Monetary Policy Committee voted 6-3 to increase the benchmark lending rate by 25 basis points to 1.25%. A minority of officials maintained their push for a move of double that size. Policy makers led by Governor Andrew Bailey hinted that they may join a growing global trend for larger hikes if inflation continues to soar, saying “it would be particularly alert to indications of more persistent inflationary pressures, and would if necessary act forcefully in response.” Crucially, that language was endorsed by all the BOE’s voters, a departure from May when two declined to sign up to guidance that more hikes were needed. The bank also raised its forecast for the peak of inflation this year to “slightly above” 11%, reflecting the planned increase in the energy price cap in October, and said it now expects the economy to contract in the current quarter. Investors raised their bets for further rate increases this year, pricing in a 3% base rate by the end of the year. That would likely require three half-point rate increases and a further quarter-point one at the remaining four meetings this year, an unprecidented pace of tightening. For now though the BOE, which was first major central bank to hike rates after the pandemic, is moving slower than some of its peers. The U.S. Federal Reserve raised interest rates by 75 basis points on Wednesday, the biggest increase since 1994. The Swiss National Bank also surprisingly hiked rates by 50 basis points earlier Thursday. The BOE “continues to balance the inflationary effects on the economy, with the very real chance that they tighten too much and the UK economy lurches into a full blown recession,” said Alan Custis, managing director at Lazard Asset Management. But while the BOE is grappling with an inflation rate that has already hit a four-decade high of 9%, officials are also concerned about an economic slowdown that is putting the UK at risk of recession. NN: Soon to little to late interest rate increases will turn into to much too soon interest rate increases. Reality is the runaway inflation will soon turn into stagflation and then a full blown depression,