The Bank of England has raised interest rates by 0.25 percentage points in an attempt to curb soaring inflation.
In the monetary policy committee's meeting today (May 5), six members voted to raise rates to 1 per cent.
The remaining three members voted to increase rates by 0.5 percentage points to 1.25 per cent.
The central bank has hiked the base rate of interest in recent months to try and tame inflation, which has surged ahead of the bank's 2 per cent target each month since May last year.
The inflation figure hit 7 per cent in March, a 30-year high.
In the meeting minutes, the committee said the Russian invasion of Ukraine has led to a 'material deterioration' in the outlook for UK and world growth.
"These developments have exacerbated greatly the combination of adverse supply shocks that the United Kingdom and other countries continue to face," it said.
"Concerns about further supply chain disruption have also risen, both due to Russia’s invasion of Ukraine and to Covid-19 developments in China."
The MPC highlighted how UK GDP is estimated to have risen by 0.9 per cent in the first quarter of the year, stronger than expected, and the unemployment rate fell to 3.8 per cent in the three months to February.
Despite surveys of business activity remaining strong, there have been signs of the squeeze on incomes starting to weigh on the household sector, the committee said.
It now expects interest rates to rise to 2.5 per cent by mid-2023, before falling to 2 per cent.
"Global commodity prices are assumed to rise no further in the central projection, global bottlenecks ease over time, and the weakening in demand growth and building excess supply lead domestic inflationary pressures to subside."
sally.hickey@ft.com
