Interest rates are expected to be hiked once again on Thursday to their highest level for 13 years as the Bank of England battles to cool rocketing inflation. The Bank’s policymakers are predicted to increase rates from 0.75% to 1% – a level not seen since early 2009 – and ramp up its forecasts for inflation as the Ukraine war compounds a crippling cost-of-living crisis.
Members of the Monetary Policy Committee (MPC) have already raised rates at each of its past three meetings to try to rein in inflation, which hit a 30-year high of 7% in March. The cost crunch is expected to tighten its grip later this year when the energy price cap is revised once again, with warnings inflation could peak at 9% or even double digits in the autumn.
As households and businesses tighten their belts in the face of the cost pressures, UK growth is set to suffer and the Bank is likely to cut its outlook for the economy as well on Thursday, according to experts. Governor Andrew Bailey has recently warned the Bank is “walking a very tight line” between tackling inflation and avoiding a recession.
