The Bank of England (BoE) on Thursday announced its biggest rise in interest rates in more than three decades to 3%, representing 0.75 percentage points, in a bid to tame soaring inflation in the country.
as it predicted a peak inflation rate of just under 11 per cent.
The bank’s Monetary Policy Committee (MPC) latest decision represented the eighth consecutive jump in interest rates by the central bank, and the biggest increase since 1989.
The Pound Sterling weakened on the foreign exchanges, to sit at $1.1201- 1.7 per cent down- at 12.20pm local time Thursday after the rate rise was imposed, its lowest level since October 21.
The Bank also warned that the UK could be on course for the longest recession since reliable records began in the 1920s, as the economy faces a “very challenging outlook”.
In addition, it projected that the Gross Domestic Product (GDP) could shrink for every quarter for the next two years, with growth only returning in the middle of 2024.
News reports indicate that the government is expected to announce tax rises and spending cuts as part of the budget, potentially further weighing on growth.
