Bank of England Hikes Interest Rates to 1%, a 13-Year High

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%. 

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