BoE raises rates, despite likely recession

STORY: The Bank of England raised interest rates again on Thursday (September 22), in a bid to tame inflation.

That’s despite the economy likely entering recession.

The BoE lifted its key interest rate to 2.25%, up from 1.75%.

The move follows the U.S. Federal Reserve's decision on Wednesday (September 21) to raise its rate.

A move that has prompted central banks worldwide to do the same.

That’s as global labor shortages and rising energy costs spur inflation.

Britain’s new finance minister, Kwasi Kwarteng, said he was focused “unashamedly” on growing the economy, and that he expected the Bank of England to take action to contain rising prices.

The BoE said it would continue to “respond forcefully, as necessary” to inflation.

It now expects it to peak at just under 11% in October.

The bank also estimates that Britain’s economy will shrink 0.1% in the third quarter, in part due to an extra public holiday for Queen Elizabeth’s funeral.

Coming after a fall in output in the previous quarter too, that would mean the country was officially in a recession.