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[Bank of England Raises Rates for First Time Since 2023; Inflation Outlook to Determine Future Path] ⑴ The Bank of England raised its benchmark interest rate to 4.0% on Thursday, its first rate hike in over three years. The Monetary Policy Committee voted 8-1, with Mann voting for a 0.5 percentage point increase and the remaining members supporting a 0.25 percentage point increase. ⑵ Governor Bailey stated that current energy prices have accumulated sufficient inflationary pressure, justifying the rate hike. However, unless the Middle East conflict is resolved, this action may not be the last rate hike, emphasizing that it should not be seen as the start of a series of rate hikes. ⑶ The Bank of England's latest forecasts show that, under the baseline scenario, CPI will peak at around 5% in the second quarter of 2027 and only fall back to the 2% target in the third quarter of 2028, about two quarters later than previously predicted. ⑷ The Bank of England raised its economic growth forecasts for 2026 and 2027 to 1.6% and 1.3% respectively, noting that stronger-than-expected activity data strengthened the case for tightening monetary policy, but expects growth to slow in the coming quarters. (5) Vice Governor Lombardelli and Chief Economist Peale believe there are reasons for further rate hikes in the near term. Committee member Green indicated that continued rate hikes may be necessary, while Taylor and Dingela stated that this rate hike is insurance against a worse inflation outcome. (6) The central bank expects the government budget to suppress inflation by approximately 0.25 percentage points in the second quarter of 2027, subsequently pushing it up as the effect fades. The budget is projected to boost demand by approximately 0.1% in 2026-2027. (7) Regarding the labor market, the central bank forecasts an unemployment rate of 4.8% in 2026, with private sector regular wages growing by 3.2% year-on-year in the fourth quarter of 2026. Real after-tax labor income is expected to decline in both this year and next. (8) The implied bank interest rate path from market rates shows 3.9% in the fourth quarter of 2026, and 4.9% in both the fourth quarters of 2027 and 2028. Bailey stated that the upward curve in the market partially reflects risk premiums rather than expected interest rates. (9) The central bank also cautioned that the energy price risk stemming from the conflict between the US and Iran remains a key variable for the inflation outlook. Under an unfavorable scenario, if oil prices peak at approximately $130 per barrel, inflation would reach 6.2% in the third quarter of 2027.