The Bank of England raised benchmark interest rates by 50 basis points, the most since 1995.
Despite the signs of recession in the country’s economy, the bank increased the interest rates from 1.25 percent to 1.75 percent, the highest level since the end of 2008, in order to control the inflation, which is expected to rise to 13 percent.
Deciding to increase interest rates, the bank also warned that the economy is facing recession. According to the bank, the contraction that will begin in the last quarter of 2022 will continue in 2023, and the longest recession will be experienced after the global financial crisis.
On the other hand, the bank predicts that inflation will peak at 13.3 percent in October, due to the rise in energy prices due to the Russian invasion of Ukraine. The bank expects inflation to fall back to 2 percent in two years.
The bank, which gives priority to controlling high inflation, has thus made its sixth increase since December.
Emphasizing that despite the pressures of the Federal Reserve and the European Central Bank to increase at a higher rate after the decisions, the Bank emphasized that the economic uncertainties were too much and announced that they would follow the developments closely in the upcoming meetings.