cut-rate

By raising rates now the bank is not only trying to keep on top of inflation but will also have more scope to cut rates in the future if it needs to boost the economy.

Investors had been expecting the Federal Reserve, which had hiked rates to the highest levels in more than two decades to fight the problem, to cut rates this year as a result.

Its key lending rate is now in a target range of 4.25% to 4.5%, but the Fed has indicated that it will cut rates at a slower pace next year.

On Wednesday, forecasts released by the bank showed policymakers adjusting their plans to cut rates less next year than anticipated just three months ago.

On Thursday the Bank of England's interest rate-setting committee will meet to discuss whether to cut rates.