On Thursday, the Bank of England (BoE) raised its benchmark interest rate by 75 basis points to 3 percent, its highest level since November 2008, to battle the current double-digit inflation.
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At its meeting on Wednesday, the BoE's Monetary Policy Committee (MPC) voted in favor of the increase by a majority of 7-2.
Since Dec. 2021, the BoE has increased its benchmark rate from 0.1 percent to 3 percent. In the 12 months to September, the Consumer Price Index (CPI) rose to 10.1 percent from 9.9 percent in August.
"Inflation is too high. It is well above our 2 percent target. High energy, food and other bills are hitting people hard," the central bank said.
The BoE expects consumer price inflation to rise to around 11 percent in the fourth quarter (Q4) of 2022 before decelerating to 10 percent in the first quarter (Q1) of next year and dropping sharply further from the middle of next year.
The BoE also warned about the country's economic outlook, saying that gross domestic product (GDP) is expected to "have contracted by 0.5 percent in 2022 Q3, and is projected to fall by 0.3 percent in Q4."
The BoE said that the United Kingdom economy will remain in recession throughout 2023 and the first half of 2024, and GDP will recover only gradually thereafter.