Bank of England raises interest rate by quarter point after surprise leap in inflation

The Bank of England has revealed it no longer believes the UK will face a technical recession this year, as it raised the interest rate by a further quarter percentage point.

The unexpected change to its forecast was contained in the minutes alongside its decision to raise borrowing costs for an eleventh successive time to 4.25%.

The monetary policy committee's decision follows hard on the heels of data showing that far from falling in February, UK inflation rose to 10.4%.

Some had speculated that in the face of the financial instability the Bank might pause its increases in borrowing costs - the fastest ramp-up since it was granted independence to set monetary policy in 1997.

However, the decision was relatively clear-cut, with seven of the nine members voting for the 25 basis point increase.

Bank of England Governor Andrew Bailey said that while the prospects of a recession had been on a "knife-edge" back in February, he feels "a bit more optimistic now" and expects inflation to fall sharply in the summer.