By Paul Hannon

The Bank of England raised its key interest rate Thursday for a 10th straight policy meeting, but signaled it may soon pause that series as the annual rate of inflation falls and the economy falters.

The U.K.'s central bank raised its Bank rate to 4% from 3.5%.

The BOE's move follows the Federal Reserve's Wednesday decision to raise its key rate by a quarter of a percentage point, a step down from its half-point rise in December

The Fed signaled it was on track to do so again at its meeting next month while officials consider whether and when to pause increases late this spring.

In contrast, the European Central Bank is expected to match the BOE in repeating the half-point rise it announced in December when its latest policy decision is published later Thursday.

The BOE said further rate rises are possible, but only if inflation threatens to be high for longer than it currently expects it to be. The central bank had previously set a lower bar for further rate rises, but also warned that there was a "large" risk that a tight jobs market and big pay rises would keep inflation higher for longer than it anticipates.

"If there were to be evidence of more persistent pressures, then further tightening would be required," the BOE said.

The central bank dropped its previously stated commitment to respond "forcefully" to "more persistent inflationary pressures," an indication that its next move is unlikely to be larger than a quarter-point.

Write to Paul Hannon at paul.hannon@wsj.com

(END) Dow Jones Newswires

February 02, 2023 07:19 ET (12:19 GMT)