Bank of England Raises Interest Rates 50 BPS, Highest in 14 Years

LONDON — Major central banks have stepped up their fight against runaway inflation, unleashing another 350 basis points of hikes in a pivotal week in which policymakers are determined to show they mean business.

The Federal Reserve raised U.S. rates by three-quarters of a percentage point for a third straight time on Wednesday, while the British, Swiss and Norwegian central banks all delivered large hikes on Thursday.

Central banks in the 10 big developed economies have raised rates by a combined 1,965 basis points in this cycle to date, with Japan the holdout “dove”, sticking on Thursday with its ultra-low rates policy.

The Bank of England raised its key interest rate to 2.25% from 1.75% on Thursday and said it would continue to “respond forcefully, as necessary” to inflation, despite the economy entering recession.

The BoE estimates Britain’s economy will shrink 0.1% in the third quarter — partly due to the extra public holiday for Queen Elizabeth’s funeral — which, combined with a fall in output in the second quarter, meets the definition of a technical recession.

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