Bank of England raised interest rates up 0.5 percent points in answer to spike in inflation, which he says will hit 13% in October, despite the prediction of a prolonged recession.
In the worst forecast for in economy since 2008 banking crashCentral bank said the UK would go into recession in in final quarter of this yearbut raised the interest rate to 1.75% in trying to keep up with rising inflation. It was the biggest jump in borrowing costs in 27 years.
Bank officials said rise in energy price cap to expected £3,500 in October would be main reason for in jump in inflation – currently by 9.4%, although continued supply chain disruptions global trade was another important factor in pushing up Prices.
Longest recession since 2008 begin by the end of this yearThis added, with in economy will decrease during 2023. A protracted recession is expected to lead to higher unemployment rates rate from 3.8% to 5.5% by 2024 feature a record the fall in standard of living next year.
In a hit on next prime minister ambitions to develop the economy The Bank said that the gross domestic product will shrink by 2.1%. over five blocks in a row to leave the UK growth rate negative in both in 2023 and 2024.
Chancellor Nadhim Zahavi also immediate pressure expected to mitigate the worst effects of inflation on poorer households in emergency budget.
The Ministry of Finance said it will wait how many Ofgem regulator says energy price cap must rise on in October before decision how much more help offer households. But the bank’s forecast is likely to spur calls for plan to put in in place to protect vulnerable families from next cap announced.
AT review of in the economy, the bank said the UK will come out of recession before next elections in 2024. But that by then the standard of living will fall by 5%, the biggest decline since recording started in 1960s, Bank said.
Eight of monetary policy committee (MPC) voted for 0.5% rise in interest rates, leaving former London Stock Exchange economist Silvana Tenreiro, sole member support a smaller increase of 0.25%.
MPC announces inflationary pressure in UK and others of Europe has stepped up significantly since the Bank last review in May, largely reflecting the “nearly doubling in wholesale gas prices since May due to Russian restrictions of gas supplies to Europe and risk of further restrictions.
Household energy bills to triple in a year after price lid on increased again in October. Ofgem will announce the cap at the end of this month, and there was speculation that it would rise above £3,000 before increasing to £3,600 in January.
However, the bank of England said it expects wholesale gas prices to rise more quickly, forcing Ofgem to raise the ceiling to £3,500 as soon like October.
” latest rise in gas prices led to another significant deterioration in perspectives for Events in UK and others of Europe,” the statement said.
“It is now predicted that the UK will enter recession from the fourth quarter of this is year. Real a family post- A sharp decline in tax revenues is predicted. in 2022 and 2023″. added.