Bank of England raises interest rates to 13-year high Business News

The Bank of England has hiked interest rates to their highest level in 13 years as it seeks to ease the cost of living crisis.

He announced a rise of 0.75% to 1% – a level not seen since 2009, in the aftermath of the financial crisis the previous year.

Thursday’s decision comes as the Bank seeks to rein in soaring inflation, which hit a 30-year high in March.

Inflation is expected to soar into double digits in October when households take another 40% rise in their energy bills, the Bank’s Monetary Policy Committee (MPC) said in its announcement.

Average gas and electricity bills are expected to hit £2,800 when Ofgem raises its price cap to reflect an increase in wholesale energy costs, which have been exacerbated by the war in Ukraine.

Prices for food and other basic goods and services are also expected to continue to rise.

The MPC warned that while wage growth will be stronger than expected, household disposable incomes will continue to fall.

A further decline in consumer spending is expected to cause the economy to contract in the last quarter of 2022.