The Bank of England approved to raise its benchmark interest rate by 50 basis points on Thursday.
The base rate was raised to 2.25% from 1.75% after inflation in the United Kingdom slightly dipped to 9.9% in August, but remained well above the central bank’s target of 2%. Despite being pressured by rising energy and food prices, core inflation, which excludes the aforementioned categories, was still 6.3% on an annual basis in August.
The Bank of England estimated inflation in the area to peak in October just under 11%, a downward revision of its previous estimate of 13%.
The move by BoE came after its economy was widely expected to enter a recession as economists forecast a 0.1% contraction in the third quarter, followed its 0.1% contraction in the second quarter.