Bank hikes rates to 1% and warns cost crisis will send economy into reverse

The Bank of England has hiked interest rates to 1% as it warned the economy will go into reverse and that inflation will peak at more than 10% as the Ukraine war compounds a crippling cost of living crisis.

Members of the Bank’s nine-strong Monetary Policy Committee voted 6-3 to increase rates from 0.75% to 1% – the fourth time they have voted for a rise in a row and taking rates to a level not seen since 2009.

In a grim set of forecasts, the Bank predicts growth will contract in the final three months of 2022 as the cost squeeze sees households rein in their spending.