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LONDON (AP) — Britain’s central bank on Thursday raised its key interest rate again but toned down the pace as inflation shows signs of easing, mirroring action by the U.S. Federal Reserve and European policymakers.

The Bank of England raised the benchmark rate by half a percentage point, to 3.5%, the highest level in 14 years. It was the ninth consecutive increase since December 2021 and follows last month’s outsized three-quarter point hike, the biggest in three decades.

This time, officials opted for slightly less aggressive action after data this week showed inflation slipped from a 41-year high, but they warned that more hikes are likely to come.

The bank last month forecast a prolonged recession in the U.K. and consumer price inflation staying “very high” in the near term. Should that scenario play out, further rate increases may be needed to get inflation back to its 2% target, the bank said, adding that it “will respond forcefully, as necessary.”

One big factor behind the need to keep raising rates is Britain’s lingering shortage of workers, according to the bank.

“The labor market remains tight and there has been evidence of inflationary pressures in domestic prices and wages that could indicate greater persistence and thus justifies a further forceful monetary policy response,” it said.

At the same time, the bank noted that the job market’s “peak tightness” appears to have passed.

The Bank of England becomes the latest to fall in line with the Fed, which hiked its benchmark rate by half a point Wednesday. Switzerland’s central bank and the European Central Bank followed suit Thursday. Norway’s central bank hiked by a quarter-point in a bustling week of central bank action.

Central banks worldwide have been battling to keep inflation under control, but Bank of England policymakers face extra pressure to strike the right balance because Britain’s economic outlook is worse than any other major economy.

The high cost of food and energy is eroding British households’ spending power while employers face pressure to boost wages to keep pace with inflation amid a nationwide wave of strikes by nurses, train drivers, postal workers, ambulance staff and others.

Britain’s economy won’t slow as much as predicted in the final three months of the year but will still shrink by 0.1%, better than the 0.3% contraction predicted last month, the bank said.

It forecast last month that inflation would peak at around 11% in the last three months of the year. It said inflation should then start slowing next year, dropping below the bank’s 2% target within two years.

There were early signs that price spikes were easing, though inflation is still stuck near a 40-year high. Annual consumer price inflation dipped to 10.7% in November from 11.1% the previous month, according to official data released Wednesday.

British consumers have been squeezed by soaring energy costs fueled mainly by Russia’s war in Ukrain e, which scrambled global oil and natural gas markets. The government has stepped in to help households that can’t afford to pay for heating this winter by capping energy bills.

Consumer price inflation is expected to stay “elevated” and fall gradually over the first three months of next year as earlier increases in energy prices fall out of the annual comparison, the Bank of England said. This effect would outweigh continued strong inflation in food and services, it said.

Many economists expect the central bank to issue at least one more rate increase, most likely by another half-point, when officials hold their next meeting in February. Many predict interest rates could peak at 4.5% by the middle of 2023.

“Despite the coming slowdown, we think the bank will continue to push rates further in the first half of next year,” said Luke Bartholomew, senior economist at fund manager abrdn. “But we are getting closer to the point where the debate starts to shift from how high interest rates get, and instead moves to how long rates stay high before a cutting cycle begins.”