Bank of England raises interest rates, warns of prolonged recession

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The Bank of England raised interest rates in the UK by 50 basis points, to 1.75 per cent. This is the largest increase in 27 years. At the same time, the central bank warned of a prolonged recession.

mtmsource: BELGA

He raised the interest rate there to combat high inflation. By raising interest rates, and thus making borrowing more expensive, central banks are trying to lower demand. This is the sixth consecutive increase in interest rates in the UK.

Inflation is now at 9.40 percent, the highest level in 40 years. Energy and food prices in particular have risen sharply. The Bank of England expects inflation to peak at 13.3% in October. At the same time, she warns of a recession that could explode in the fourth quarter and could last for a year. This is the longest economic downturn since the financial crisis. The UK economy is expected to contract by 2.1% and inflation will remain high throughout 2023.

For the British, this represents the largest decline in their disposable income in nearly sixty years. Even factoring in the billions in government support programs for families, they will be 5 percent poorer by the end of next year, it seems. Your average energy bill will go up by 75 percent.

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Megan Vasquez

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