The Bank of England hiked interest rates by the most in 27 years on Thursday as it predicted U.K. inflation may hit double digits by the end of 2022 and the economy could endure more than a year of recession as high prices hit households partly as a result of the war in Ukraine. The 50 basis point hike in borrowing costs by the BoE’s monetary policy committee (MPC) was the biggest increase since 1995, and took interest rates to 1.75%, the highest level since the depths of the financial crisis in 2008.
Inflationary pressures in the U.K. and the rest of Europe have intensified significantly since its May monetary policy meeting said the BoE: “That largely reflects a near doubling in wholesale gas prices since May, owing to restriction of gas supplies to Europe and the risk of further curbs. As this feeds through to retail energy prices, it will exacerbate the fall in real incomes for U.K. households and further increase U.K. CPI in the near term.” The typical annual household fuel bill could rise from just under £2,000 to around £3,500 when regulated prices rise in October, the BoE said. U.K. in …