Interest rates rise by 0.5% as Bank of England says UK ‘already in recession’

Interest rates have been raised by 0.5 per cent, the Bank of England has announced. The Bank of England has said it now expects a 0.1 per cent fall in GDP over the

current quarter, indicating that the country is already in a recession. A decision on whether to increase interest rates next week was previously delayed by the Bank of

England as a mark of respect following the death of the Queen. The UK interest rate is now at its highest level since the 2008 financial crisis. Five members voted to

raise Bank Rate by 0.5 percentage points to 2.25 per cent, three members preferred to increase Bank Rate by 0.75 percentage points, to 2.5 per cent, and one member preferred to

increase Bank Rate by 0.25 percentage points, to 2 per cent. The increase highlights the Bank’s efforts to get control of inflation which stands at a decades-high rate of

9.9 per cent. The Bank reduced its inflation forecast in the announcement predicting it will peak at 11 per cent in October, down from 13 per cent in their last forecast.

The revision comes after prime minister Liz Truss announced a freeze on the energy price cap - a move that is expected to limit inflation. In a statement released on

Thursday, the Bank of England said: “In the August Monetary Policy Report, the MPC noted that the risks around its projections from both external and domestic factors were

exceptionally large, given the very large increase in wholesale gas prices since May and the consequent impacts on real incomes for UK households and on CPI

inflation.