Bank of England predicts recession as it enacts largest rate hike in 27 years

Inflation peak of 13%

The Bank of England has raised interest rates by 0.5%, its largest hike since 1995, as it forecast a recession in the UK by the end of this year.

The bank's Monetary Policy Committee voted 8-1 to raise rates to 1.75%, with only Silvana Tenreyro voting for a smaller 0.25% rise. These updated forecasts now see the UK falling into recession in the fourth quarter of 2022, as GDP growth continues to slow. The economy would then keep contracting throughout next year, with GDP falling by about 2.1%. "Real household post-tax income is projected to fall sharply in 2022 and 2023, while consumption growth turns negative," the bank's MPC report read. It added that it now projects inflation to peak in the fourth quarter of 2022 at just o...