The Bank of England hiked rates as expected on Thursday, but said that consumer price inflation looked set to fall over a percentage point short of its 2.0% target by the end of its three-year policy horizon.
Bank Rate was hiked by 75 basis points to 3.0%, the biggest increase for 33 years.
However, while one of the Monetary Policy Committee’s nine members voted for a smaller 50bp hike, another voted for a 25bp increase, whereas 2 members had been expected to opt for a half percentage point move.
Sterling reacted quickly and as of 1214 GMT was off by 1.34% to 1.1239.
In parallel, the yield on the benchmark 30-year Gilt was around 16 basis points higher to 3.72%.
— More to follow —
