The Bank of England just hiked interest rates again, as central banks get serious about red-hot inflation

• The Bank of England hiked its main interest rate for the second meeting running Thursday, from 0.25% to 0.5%.
• Central banks around the world are grappling with red-hot inflation, which is running at a 30-year high in the UK.

The Bank of England has hiked UK interest rates for the second meeting in a row, as it tries to tackle the strongest inflation in 30 years.

The BoE's monetary policy committee raised its main interest rate by 25 basis points from 0.25% to 0.5%, in a decision announced Thursday. It followed a 15 basis point hike in December, which was the first upward move since 2018.

It comes as global investors brace for the US Federal Reserve to hike its main rate in March for the first time since December 2018.

Central banks are dialing back the huge monetary stimulus they injected to support economies in 2020 and 2021.

Inflation is soaring in many economies around the world, as global supply chains struggle to keep up with a sharp rebound in demand.

In the UK, inflation hit a 30-year high of 5.4% year-on-year in December. The Bank of England, like other central banks such as the Fed, had played down the chances such red-hot price rises.

But the BoE said Thursday: "Given the current tightness of the labour market and continuing signs of greater persistence in domestic cost and price pressures, the committee judges that an increase in bank rate of 0.25 percentage points is warranted at this meeting."

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Many strategists think the BoE will continue hiking interest rates in 2022. There's uncertainty about the pace and magnitude of increases, however.

Market prices suggest traders on average expect the BoE to gradually raise interest rates to around 1.5% by the end of the year.

"We still expect two to three hikes in 2022, though recent strength in data now makes three more likely," Peder Beck-Friis, portfolio manager at PIMCO, said in a note before the meeting. "That would bring the policy rate to 1% by year end."

The pound rose after the announcement, and was up 0.3% against the dollar at $1.3614.

Global stocks have fallen in 2022 so far as investors come to terms with a new reality in which central banks are no longer supporting economies and markets.

The Fed last month all but confirmed it will raise interest rates in March, with traders expecting the federal funds target range to increase to 0.25% to 0.5%.