Bank of England raises interest rates to record high amid rising inflation

Aug. 4 (UPI) -- The Bank of England raised interest rates by half a percentage point Thursday in the biggest rate hike in nearly 30 years as the country tries to curtail rising inflation amid soaring energy costs.

The Bank's Monetary Policy Committee voted 8-1 to raise rates 0.5% to 1.75% -- the sixth hike since December and the panel's largest increase since 1995.

Thursday's actions by U.K.'s central bank come after similar moves by Fed Chairman Jerome Powell, who last week raised U.S. interest rates three-quarters of a percent for the second time this year but notably said he doesn't believe the U.S. is in a recession.

Bank of England announced the rate hike Thursday in a Monetary Policy Summary, in which officials warned a recession was just around the corner in the UK, where inflation has ballooned to more than 13% this year.

The bank's forecast showed the recession lasting at least five quarters.

The troubling outlook cited several factors squeezing the economy, including a "near doubling in wholesale gas prices since May" and "Russia's restriction of gas supplies to Europe" since the start of the Ukraine war.

During this time, living standards in the country have declined more than 5%, the bank's experts reported.

Making matter worse, income was expected to fall sharply over the next year, which would undercut household buying power while high utility bills also keep extra spending in check.

The Bank also predicted GDP to fall by 1.25% next year, followed by a dip of 0.25% in 2024, the first back-to-back contraction since the 1960s.

The committee vowed to take steps to get inflation back to normal levels around 2%.

The MPC said it did expect the current economic conditions "to dissipate over time."