The Bank of England has increased interest rates.

The Bank of England has increased interest rates by a quarter of a percentage point to 4.25 per cent, despite the turmoil that has engulfed banking in recent weeks.

The rise, in line with economists’ forecasts, came a day after data showed that the annual rate of inflation jumped from 10.1 per cent to 10.4 per cent in February. «If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required,» it said, echoing guidance it gave at its February meeting.

Commenting days after the forced takeover of Credit Suisse and the earlier collapse of Silicon Valley Bank, the BoE said it judged UK banks to be «resilient» and «well placed to continue supporting the economy in a wide range of economic scenarios, including in a period of higher interest rates».

But the BoE said that consumer price inflation was «still expected to fall significantly» in the second quarter of this year «to a lower rate than anticipated» last month. It said this was mainly because of declines in energy prices and the government’s decision to maintain a support scheme for households.

The bank also suggested that it no longer expected a technical recession in the UK this year, adding that GDP «was now expected to increase slightly in the second quarter».

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