For first time in decade, UK interest rates are due to rise

LONDON – The British economy is lagging its peers around the world this year, yet the Bank of England is poised to deliver its first interest rate increase in a decade.

On Thursday, the central bank is expected to raise its main interest rate by a quarter percentage point from the record low of 0.25 per cent. That would be its first hike since July 2007, just before global credit markets started to freeze up ahead of the following year’s full-blown global financial crisis.

The main motivation behind the anticipated increase is the fact that inflation is running above the bank’s target of 2 per cent by a full percentage point. Inflation has spiked in the wake of the pound’s fall following last year’s vote to leave the European Union.