By Paul Hannon

The Bank of England raised its key interest rate Thursday, a fresh sign that policy makers around the world are determined to press down on inflation despite strains in the banking system.

The central bank had previously indicated that it might pause a series of rate increases that dates back to December 2021, but an unexpected pickup in inflation during February helped persuade policy makers that another increase in borrowing costs was needed to cool prices rises.

Policy makers said the U.K.'s banking system "remains resilient," and warned they may need to raise the key rate again.

"If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required," the BOE said in a statement.

Repeating the pattern of recent decisions, seven members of the Monetary Policy Committee voted to raise the key interest rate to 4.25% from 4%, while two voted to leave borrowing costs unchanged. That left borrowing costs at their highest level since October 2008.

Write to Paul Hannon at paul.hannon@wsj.com

(END) Dow Jones Newswires

March 23, 2023 08:17 ET (12:17 GMT)