The Bank of England (BoE) raised interest rates by a quarter-percentage point Thursday, shrugging off pressure for a bolder move to combat price increases that have pushed inflation to a 40-year high.

While the United Kingdom’s central bank began raising interest rates earlier than its counterparts, the BoE is now trailing the U.S. Federal Reserve (Fed) in the worldwide fight against inflation fueled by soaring food and energy prices.

The action took the British benchmark rate to 1.25%, its highest since January 2009. It was the fifth time that the BoE has raised borrowing costs since December when it became the first major central bank to tighten monetary policy after the onset of the COVID-19 pandemic.

The nine-strong Monetary Policy Committee (MPC) voted 6-3 for the 25 basis-point hike, the same breakdown as in May with the minority voting for a 50 basis-point increase.

But some critics say it is moving too slowly to stop the rise in inflation from becoming entrenched in pay deals and inflation expectations, damaging the economy over the long term.

"The scale, pace and timing of any further increases in Bank Rate will reflect the Committee’s assessment of the economic outlook and inflationary pressures," the BoE said.

"The Committee will be particularly alert to indications of more persistent inflationary pressures, and will if necessary act forcefully in response."

The BoE dropped its guidance from May when it said most MPC members believed "some degree of further tightening in monetary policy may still be appropriate in the coming months."

The central bank noted that the market path for British interest rates had risen materially since the May meeting, even though there had been relatively little news since then.

The Fed, for its part, did go bolder Wednesday, raising its benchmark rate by three-quarters of a percentage point, the most since 1994, pushing it to a range of 1.5% to 1.75%.

"It is quickly becoming apparent that more radical action is needed for the Bank of England to establish some sense of stability, because tinkering around the edges simply isn’t cutting it," Michael Hewson, chief market analyst at CMC Markets UK, said in a note to clients.

The war in Ukraine has boosted food and energy prices as the fighting disrupts shipments of oil, natural gas, grain and cooking oil. That is adding to price increases that began last year as the global economy started to recover from the pandemic.

The BoE also increased their forecast for inflation to reach more than 11% in October after hitting 9% in April, already the highest since 1982. The bank’s inflation target is 2%.

"The increase in October reflects higher projected household energy prices following a prospective additional large increase in the Ofgem price cap," the bank said in a statement.

BoE policymakers have been cautious about raising interest rates too quickly, arguing that many of the inflationary pressures facing the British economy are external and beyond the bank’s control.

But price increases are now becoming embedded in the economy, fueling demands for higher wages and slowing economic growth as consumers and businesses curtail purchases.

Britain’s surge in inflation looks set to last longer than in many other economies, partly due to the delayed impact of its mechanism for domestic power tariffs but also because of the hit to trade from the country’s departure from the European Union.

A chronic lack of workers to fill vacancies is worrying the BoE because it could lead to a jump in wages and turn the inflation surge into a longer-lasting problem.

A fall in the value of the pound in recent weeks, caused largely by the rise in interest rate expectations in the United States and the eurozone, threatens to add to the inflation pressure in Britain.

The BoE said sterling had been "particularly weak against the U.S. dollar."

It also downgraded its short-term forecasts for Britain’s economy, saying it would shrink by 0.3% in the April-June period. It had predicted in May that there would be 0.1% growth over the three months.

The forecast for a contraction in growth in the current quarter came despite the latest measures announced in late May by finance minister Rishi Sunak to help households hit by the jump in inflation.

The BoE said the measures could boost economic output by 0.3% and push inflation by 0.1 percentage points in the first year

Figures released this week by the Office for National Statistics (ONS) showed that economic output stagnated in February and shrank by 0.1% in March, raising concerns that Britain may be headed for a recession.

The World Bank last week downgraded its outlook for the global economy and raised concerns about the return of "stagflation" – the combination of high inflation and sluggish growth last seen in the 1980s.

Fed Chair Jerome Powell acknowledged the challenges facing monetary policymakers when he spoke to reporters Wednesday.

"This is an extraordinarily unusual time, and we really don’t have a template or any experience of a situation like this," he said. "And so, I think we have to be humble about our ability to understand the data ... We need to see more data. We need to be a little bit patient."