Bank of England hikes by 50 basis points, says UK may already be in recession

ENGLAND — On Thursday, the Bank of England decided to hike its base rate from 1.75% to 2.25%, which was less than the 0.75 percentage point increase that most traders had anticipated.

Although it decreased marginally in August, the UK's inflation rate remained significantly above the bank's 2% target at 9.9% year over year.

The biggest price increases have been in energy and food, but core inflation, which excludes these items, is still 6.3% annually.

The BOE has revised its previous prediction of a 13% high in inflation to a peak of just under 11% in October.

The bank stated it believed the U.K. economy was already in a recession as it anticipated GDP would drop by 0.1% in the third quarter, down from a previous prediction of 0.4% growth.

This was when the smaller-than-expected boost occurred. It would come after a 0.1% drop in the previous quarter.

The British Chambers of Commerce and a number of analysts have previously predicted that the UK will experience a recession before the year is out.

In addition to energy price shocks, it also deals with trade barriers brought on by COVID-19 and Brexit, deteriorating consumer confidence, and diminishing retail sales.