Bank of England may be forced to raise interest rates to 4% in 2023

The Bank raised rates by 0.5 percentage points earlier this month, the biggest single rise in almost 30 years. Photograph: Tom Nicholson/Reuters

The Bank of England could be forced to raise interest rates to 4% from as early as next year to combat soaring inflation, despite the growing risk of recession amid the cost of living crisis.

City traders are betting the central bank will more than double the cost of borrowing from 1.75% in response to inflation at the highest levels for more than 40 years.