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Central Banks

Bank of England Governor Mark Carney speaks following decision to hike rates

Bank of England Governor Mark Carney gave a speech about the central bank's decision to raise interest rates for the first time in more than a decade.

Investors and analysts widely anticipated a rise in rates; markets priced in a 90 percent possibility of a hike prior to the decision.

In September, the U.K. central bank said a rate hike was likely to be needed in "coming months."

Rate-setters voted 7-2 in favor of hiking the benchmark rate to 0.5 percent from 0.25 percent.

"It isn't so much where inflation is now but where it is going that concerns us," Carney said at a news conference following the announcement.

In one of the most closely watched interest rate decisions since the financial crisis, the bank said it projected "very gradual" further increases over the next three years.

Carney stressed that rates would "gently" rise as inflation eases in the foreseeable future.

The central bank expects the inflation rate to have peaked at 3.2 percent in October — and will be at 3 percent for the year as a whole. The bank had previously said that inflation would be 2.8 percent for 2017.

The British pound fellsharply against the U.S. dollar following the announcement.

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