UK central bank divided over rate hike as inflation soars above target

The Bank of England decided to keep its interest rate at 0.25 percent following the Fed's decision on Wednesday ahead of the UK's departure from the European Union.

However, the decision was split as the bank's Monetary Policy Committee (MPC) voted by a majority of 5-3 to maintain the bank rate, as three of the bank's eight policymakers voted for a rate increase.

Inflation concerns were behind the split vote with the MPC concerned that CPI could reach three percent this fall. Inflation last month jumped to 2.9 percent – well above the target of two percent.

The last time there were dissenting votes for a rate rise was in 2011, according to the Telegraph broadsheet.

To bring down inflation, the bank would have to raise rates, which would hurt the economy by making loans more expensive.

The British pound, which has been volatile in recent months amid Brexit uncertainty, jumped in value on the news of the split decision. The minutes also suggested the Bank of England is a lot closer to raising rates than many investors had expected.

The US Federal Reserve raised American interest rates late on Wednesday and - notwithstanding some softening domestic data - signaled it is likely to raise rates once more this year.

(CGTN)