LONDON (AP) — The Bank of England focused on fighting inflation, announcing an 11th-consecutive interest rate increase Thursday despite concerns about the economic fallout from troubles in the global financial system.

Britain’s central bank boosted its key rate by a quarter-percentage point to 4.25 per cent, a day after the US Federal Reserve approved a similar move to tame inflation that is crimping household budgets and slowing economic growth.

The decision by the bank’s Monetary Policy Committee came after the UK statistics agency surprised policymakers Wednesday by reporting that inflation accelerated to 10.4 per cent in February, driven by the cost of food, clothing and dining out.

Before the figures were released many analysts had expected the Bank of England to keep rates on hold following the collapse of two US banks and the ensuing troubles at Switzerland’s Credit Suisse, which forced a hastily arranged takeover by rival UBS.

The bank will “continue to monitor closely indications of persistent inflationary pressures”, it said in announcing its decision. “If there were to be evidence of more persistent pressures then further tightening in monetary policy would be required.”

Still, Thursday’s move was the smallest rate hike since May 2022 as the Bank of England forecasts a steep drop in inflation later this year. Inflation is expected to slow to 2.9 per cent by the end of the year as energy costs fall and big price increases recorded last year drop out of the calculation.

Raising interest rates increases the cost of borrowing, which reduces spending and relieves upward pressure on prices. But it also tends to slow economic growth.

Central bankers worldwide are struggling to balance competing economic demands as they try to rein in inflation, which erodes savings and increases costs for consumers and businesses, without unnecessarily damaging economies weakened by the COVID-19 pandemic and Russia’s war in Ukraine.

Following the collapse of Silicon Valley Bank in California and the ripples it unleashed on the global financial system, policymakers also are concerned that banks around the world may curtail lending, further crimping economic growth.

The Fed raised its key interest rate by a quarter-point Wednesday as chair Jerome Powell tried to reassure Americans that it is safe to leave money in their banks.

The Swiss central bank hiked its key rate by a half-point Thursday and declared that the Government-orchestrated takeover of Credit Suisse by rival Swiss bank UBS “put a halt to the crisis”.

A week ago the European Central Bank hiked rates by a large half-point, brushing aside the financial market jitters and calling Europe’s banking sector resilient.

The economic situation is even more complex in Britain, where a high level of dependence on natural gas and limited storage capacity have left energy users particularly exposed to the surge in global gas prices following Russia’s invasion of Ukraine.

The gas crunch took an unexpectedly big toll in February, when the high price of energy needed to heat greenhouses, combined with bad weather in southern Europe and Africa, led to a shortage of fresh vegetables like peppers, cucumbers and spinach.

That contributed to an 18 per cent jump in food prices, the biggest increase in 45 years.

Britain also is still adjusting to the impact of leaving the European Union, which reduced trade with its neighbours, curtailed the supply of cheap labour, and slowed economic growth.

The Bank of England and the Government have been focused on trying to prevent those cost pressures from becoming embedded in the economy, driving up wages and further fuelling inflation.

“We’ve moved from a situation where there was at least a measure of clarity from central banks to one where even they must be second-guessing themselves,” Russ Mould, research director at UK investment platform AJ Bell, said before the rate decision was announced.