The Bank of England has raised interest rates to 1.25 per cent from 1 per cent — the highest level since January 2009.
Many analysts and traders had expected the regulator's monetary policy committee (MPC) to decide on a 25-basis-point rise in the benchmark lending rate to 1.25 per cent, as it fights soaring inflation which sits at 9 per cent and is expected to top 11 per cent later this year.
The move is much less severe than the US Federal Reserve's historic 75-basis-point increase on Wednesday.
Sterling lost ground against the dollar and euro earlier in the day with traders' attention on the central bank's interest rate decision. The pound slumped as much as 0.9 per cent against the dollar to $1.2070. Against the euro, it was down 0.4 per cent at 86.03p.
Three of the nine-person committee voted for an even bigger increase, arguing that rates should rise as high as 1.5 per cent.
The committee had been under pressure from some to order a more aggressive increase than the expected quarter-percentage-point rise amid concern such a move would do little to combat price increases that have pushed inflation to a 40-year high.
Policymakers led by Governor Andrew Bailey hinted that they may join a growing global trend for larger hikes if inflation continues to soar, saying the MPC “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 on the cards.
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The BoE also raised its forecast for the peak of inflation this year to “slightly above” 11 per cent, reflecting the planned increase in the energy price cap in October, and said it now expects the economy to contract in the current quarter.
The central bank warned that prices for households across the country might increase even further than previously thought.
“In view of continuing signs of robust cost and price pressures, including the current tightness of the labour market, and the risk that those pressures become more persistent, the committee voted to increase the Bank rate by 0.25 percentage points,” the MPC said in a notice.
The cost of living has been soaring for months, with consumer prices index (CPI) inflation hitting a 40-year high of 9 per cent in April when the energy price cap was raised. Experts have warned that regulator Ofgem could put up energy prices even further, from £1,971 per year to around £2,800.
This, alongside other pressures in the economy, could lead to inflation topping 11 per cent in October, the bank said.
Just a month ago it had predicted inflation would peak at above 10 per cent.
“The economy has recently been subject to a succession of very large shocks,” Governor Andrew Bailey wrote in a letter to Chancellor Rishi Sunak, setting out why inflation was so much higher than its 2 per cent target.
“These shocks have pushed global energy and tradable goods prices to elevated levels.
“Those price increases have raised UK inflation and, since the United Kingdom is a net importer of these items, will necessarily weigh on most UK households’ real incomes and many UK companies’ real profits.”
Naeem Aslam, chief market analyst at Ava Trade, said a steeper increase had been expected. “The BoE has surprised the markets by increasing the interest rate by only 25 basis points only when market players were expecting the bank to raise the rate by 50 basis point,” he said. “The move has brought weakness for sterling which itself doesn’t really help the inflation situation which the bank is trying to resolve. This is because a weaker currency brings more inflation for the UK as imports become troublesome.
“For the equity markets, the FTSE 100 index has also moved lower because traders believe that the bank needs to buckle up more and be more strict with interest rate hikes even if it comes with some pain.”
Chieu Cao, chief executive of Mintago, said the central bank's latest rise “will hardly be celebrated” by cash-strapped Britons who feel their finances are “spiralling out of control”.
“Given soaring inflation, many individuals feel they don’t have enough money to live on, let alone save,” he said. “Indeed, Mintago’s research found that 72 per cent of Britons in full-time employment feel they are prioritising immediate financial commitments [e.g. mortgages or utility bills] over their long-term financial goals. And with pressure likely to remain for some time, many will feel like their finances are spiralling out of control.”
Earlier, Michael Hewson, chief market analyst at CMC Markets UK, said in a note to clients that “radical action” is needed to provide stability to the economy. “It is quickly becoming apparent that more radical action is needed for the Bank of England to establish some sense of stability, because tinkering around the edges simply isn’t cutting it,” he said.
The US Federal Reserve on Wednesday announced its biggest interest rate increase since 1994, raising its benchmark rate by three quarters of a percentage point to a range of 1.5 per cent to 1.75 per cent.
While it began raising interest rates earlier than its counterparts, the UK central bank is now trailing the Fed in the global battle against inflation fuelled by soaring food and energy prices.
Russia’s invasion of Ukraine in February caused household costs to shoot up, with the war continuing to disrupt shipments of oil, natural gas, grain and cooking oil. This factor added to the already higher prices recorded last year as the global economy began to recover from the Covid-19 pandemic.
The Bank of England's policymakers have been cautious about increasing interest rates too quickly, arguing that many of the inflationary pressures facing the UK economy are external and beyond bankers’ control.
But price increases are now becoming embedded in the economy, giving rise to demands for higher wages amid slowing economic growth as consumers and businesses curtail purchases.
Gold prices fell on Thursday after the Fed’s announcement, as the dollar recovered slightly.
Spot gold prices fell by 0.17 per cent to $1,830.93 per ounce as of 7.30am UK time, while gold futures rose by 0.72 per cent to $1,832.75 per ounce.
The Swiss National Bank raised its policy interest rate for the first time in 15 years in a surprise move on Thursday, and said it was ready to increase it further.
The landlocked country’s central bank increased its policy rate to minus 0.25 per cent, from the minus 0.75 per cent level it put in place in 2015.
RESULTS
Bantamweight: Jalal Al Daaja (JOR) beat Hamza Bougamza (MAR)
Catchweight 67kg: Mohamed El Mesbahi (MAR) beat Fouad Mesdari (ALG)
Lightweight: Abdullah Mohammed Ali (UAE) beat Abdelhak Amhidra (MAR)
Catchweight 73kg: Mosatafa Ibrahim Radi (PAL) beat Yazid Chouchane (ALG)
Middleweight: Yousri Belgaroui (TUN) beat Badreddine Diani (MAR)
Catchweight 78KG: Rashed Dawood (UAE) beat Adnan Bushashy (ALG)
Middleweight: Sallah-Eddine Dekhissi (MAR) beat Abdel Enam (EGY)
Catchweight 65kg: Yanis Ghemmouri (ALG) beat Rachid Hazoume (MAR)
Lightweight: Mohammed Yahya (UAE) beat Azouz Anwar (EGY)
Catchweight 79kg: Souhil Tahiri (ALG) beat Omar Hussein (PAL)
Middleweight: Tarek Suleiman (SYR) beat Laid Zerhouni (ALG)
Company%20Profile
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The specs
Engine: 1.5-litre 4-cyl turbo
Power: 194hp at 5,600rpm
Torque: 275Nm from 2,000-4,000rpm
Transmission: 6-speed auto
Price: from Dh155,000
On sale: now
Desert Warrior
Starring: Anthony Mackie, Aiysha Hart, Ben Kingsley
Director: Rupert Wyatt
Rating: 3/5
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
COMPANY%20PROFILE
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KILLING OF QASSEM SULEIMANI
ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
Bangladesh tour of Pakistan
January 24 – First T20, Lahore
January 25 – Second T20, Lahore
January 27 – Third T20, Lahore
February 7-11 – First Test, Rawalpindi
April 3 – One-off ODI, Karachi
April 5-9 – Second Test, Karachi
GROUPS
Group Gustavo Kuerten
Novak Djokovic (x1)
Alexander Zverev (x3)
Marin Cilic (x5)
John Isner (x8)
Group Lleyton Hewitt
Roger Federer (x2)
Kevin Anderson (x4)
Dominic Thiem (x6)
Kei Nishikori (x7)
What are the GCSE grade equivalents?
- Grade 9 = above an A*
- Grade 8 = between grades A* and A
- Grade 7 = grade A
- Grade 6 = just above a grade B
- Grade 5 = between grades B and C
- Grade 4 = grade C
- Grade 3 = between grades D and E
- Grade 2 = between grades E and F
- Grade 1 = between grades F and G
John%20Wick%3A%20Chapter%204
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Chad%20Stahelski%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%3C%2Fstrong%3E%20Keanu%20Reeves%2C%20Laurence%20Fishburne%2C%20George%20Georgiou%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E4%2F5%3C%2Fp%3E%0A
The Gentlemen
Director: Guy Ritchie
Stars: Colin Farrell, Hugh Grant
Three out of five stars
WITHIN%20SAND
%3Cp%3EDirector%3A%20Moe%20Alatawi%3C%2Fp%3E%0A%3Cp%3EStarring%3A%20Ra%E2%80%99ed%20Alshammari%2C%20Adwa%20Fahd%2C%20Muhand%20Alsaleh%3C%2Fp%3E%0A%3Cp%3ERating%3A%203%2F5%3C%2Fp%3E%0A
Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
The%20specs
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Quick%20facts
%3Cul%3E%0A%3Cli%3EStorstockholms%20Lokaltrafik%20(SL)%20offers%20free%20guided%20tours%20of%20art%20in%20the%20metro%20and%20at%20the%20stations%3C%2Fli%3E%0A%3Cli%3EThe%20tours%20are%20free%20of%20charge%3B%20all%20you%20need%20is%20a%20valid%20SL%20ticket%2C%20for%20which%20a%20single%20journey%20(valid%20for%2075%20minutes)%20costs%2039%20Swedish%20krone%20(%243.75)%3C%2Fli%3E%0A%3Cli%3ETravel%20cards%20for%20unlimited%20journeys%20are%20priced%20at%20165%20Swedish%20krone%20for%2024%20hours%3C%2Fli%3E%0A%3Cli%3EAvoid%20rush%20hour%20%E2%80%93%20between%209.30%20am%20and%204.30%20pm%20%E2%80%93%20to%20explore%20the%20artwork%20at%20leisure%3C%2Fli%3E%0A%3C%2Ful%3E%0A
Killing of Qassem Suleimani
MORE ON TURKEY'S SYRIA OFFENCE
RESULTS
6.30pm Handicap (TB) $68,000 (Dirt) 1,200m
Winner Canvassed, Par Dobbs (jockey), Doug Watson (trainer)
7.05pm Meydan Cup – Listed Handicap (TB) $88,000 (Turf) 2,810m
Winner Dubai Future, Frankie Dettori, Saeed bin Suroor
7.40pm UAE 2000 Guineas – Group 3 (TB) $125,000 (D) 1,600m
Winner Mouheeb, Ryan Curatolo, Nicholas Bachalard
8.15pm Firebreak Stakes – Group 3 (TB) $130,000 (D) 1,600m
Winner Secret Ambition, Tadhg O’Shea, Satish Seemar
9.50pm Meydan Classic – Conditions (TB) $$50,000 (T) 1,400m
Winner Topper Bill, Richard Mullen, Satish Seemar
9.25pm Dubai Sprint – Listed Handicap (TB) $88,000 (T) 1,200m
Winner Man Of Promise, William Buick, Charlie Appleby
SPEC%20SHEET%3A%20SAMSUNG%20GALAXY%20Z%20FLIP5
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The%20specs
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