BoE Raises Interest Rate by 50bps in Hopes to Avoid Recession

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.