The Bank of England has hiked interest rates from 0.75% to 1%, the highest since the financial crisis in 2009.
The Bank further forecast inflation will climb above 10% in October this year and a prolonged period of stagnation or even recession, due to another increase of about 40% in the U.K.’s energy price cap
The Bank of England warned the economy is on course to shrink under pressure from double-digit inflation.
While the bank predicts the U.K. will avoid a technical recession — two consecutive quarters of contraction — it said output will collapse by close to 1% in the final quarter of this year. In 2023, annual GDP is expected to shrink by 0.25%.