Bank of England interest rate decision interpretation: as expected to raise interest rates by 25 basis points, and the differences within the MPC prompted the market to sharply reduce the cur

　　The Bank of England (BoE) has raised interest rates to their highest level in 15 years, warning that its fight against inflation may require a prolonged period of tighter borrowing conditions.

　　The Bank of England (GBR) raised its key interest rate by 0.25 percentage points to 5.25 percent on Thursday, in line with market expectations after a surprise 0.5 percentage point increase in June. Still, signs of an escalating debate among policymakers have prompted traders to cut their expectations for the current round of rate hikes, which now see a peak in February - just below 5.75 percent.

　　If inflation persists, the Monetary Policy Committee (MPC) said it would take further action, adding that their stance would remain "sufficiently restrictive for a sufficiently long time" to bring inflation back to its 2% target. The bank cut its growth forecasts for the next two years and raised its medium-term inflation forecast.

　　Sterling and gilt yields fell in tandem after the decision.

　　Bank of England Governor Andrew Bailey told a news conference after the decision: "We have to balance risks and we have two kinds of risks. There are different ways to reach the 2 per cent inflation target, including keeping interest rates on hold over the medium term. We don't have a hypothetical path for interest rates."

　　The Bank of England will see two months of inflation data before its next meeting in September. Asked when policy would shift, Mr Bailey said it was "too early to speculate when rates will be cut".

　　The vote showed divisions within the nine-member MPC. Catherine Mann and Jonathan Haskell voted for the 0.5 percentage point increase. Swati Digher wants interest rates to remain unchanged. The remaining six, including Bailey and his deputy, raised rates by 0.25 percentage points.

　　Luke Hickmore, investment director at Abrdn Investments, said: "The split vote suggests that interest rates are now approaching their peak. Some of the language used today also suggests they are nervous about the economy's response to continued rate hikes."

　　Dan Hansen, an economist at Bloomberg Economics, said: "The Bank of England's decision to slow down in August suggests it is a bit less worried about the inflation outlook than it was in June. That said, the message surrounding the decision suggests that the tightening cycle still has some way to go before the central bank feels comfortable pausing."