Bank of England predicts 13% inflation and recession as interest rates rise

The UK is set to fall into its longest recession since the financial crisis and inflation will peak at more than 13% as gas prices soar, the Bank of England has warned. Decision makers hiked the Bank’s base interest rate to 1.75% from 1.25%, the biggest single rise since 1995, as they tried to control the runaway inflation. Consumer Prices Index inflation will hit 13.3% in October, the highest for more than 42 years, if regulator Ofgem hikes the price cap on energy bills to around £3,450, the Bank’s forecasters said. The energy price will push the economy into a five-quarter recession – with gross domestic product (GDP) shrinking each quarter in 2023.

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