There was an update on August 4, 2022,6am.
The Bank of England on Thursday predicted that the U.K. will fall into a recession in the final quarter of this year as it announced its steepest rate hike in nearly three decades.
The Bank of England hiked interest rates by 50 basis points.
The country's already severe cost of living crisis could get worse, as inflation in the U.K. could rise to 13% by the end of the year.
The central bank said that the real household income of Britons will fall sharply in the next two years.
The Bank of England said inflation was caused by the near doubling of natural gas prices since May due to the threat of further reductions.
There are no ifs or buts when it comes to the Bank of England's 2% inflation targets, according to the governor.
According to Bailey, the central bank's commitment does not mean that interest rates will be raised by 50 basis points at its next meeting.
The Bank of England's grim numbers were further proof that the Conservatives have lost control of the economy. She said: "As families and pensioners worry about how they're going to pay their bills, the Tories are touring the country announcing policies that will do nothing to help people get through this crisis."
According to the Bank of England, the U.K. will have high inflation for the rest of the decade and will only fall to 2% in the next two years.
The European Central Bank and the U.S. Federal Reserve have both moved to control inflation. The first rate hike in more than a decade was announced last month by the European Central Bank. The Eurozone's rate of annual inflation stood at 8.9% at the end of July, which is an all time record for the bloc of 19 nations using the Euro. Christine Lagarde, president of the European Central Bank, doesn't think a European recession is likely in the next year. The U.S. Federal reserve raised its federal funds rate for the second time in two months last week. According to data released by the Bureau of Economic Analysis, America's GDP fell for a second quarter in a row, which means that the country has entered a technical recession.
The European Central Bank raised interest rates for the first time in over a decade.
The Federal Reserve raised interest rates by 75 basis points.
The economy fell 0.9% in the last quarter as experts warned that it would get worse.
The recession beats GDP estimates, but it is the largest economy in the world.