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		</div><p>The Bank of England (BoE) raised interest rates by the most in 27 years on Thursday, despite warning that a long recession is on its way, as it rushed to smother a rise in inflation which is now set to top 13 per cent.</p>
<p>Reeling from a surge in energy prices caused by Russia&#8217;s invasion of Ukraine, the BoE&#8217;s Monetary Policy Committee voted 8-1 for a half percentage point rise in Bank Rate to 1.75 per cent &#8211; its highest level since late 2008 &#8211; from 1.25 per cent.</p>
<p>The 50-basis-point increase had been expected by most economists in a Reuters poll as central banks around the world scramble to contain the surge in prices.</p>
<p>MPC member Silvana Tenreyro cast a lone vote for a smaller 25-basis-point increase.</p>
<p>The BoE warned that Britain was facing a recession with a peak-to-trough fall in output of 2.1 per cent, similar to a slump in the 1990s but far less than the hit from Covid-19 and the downturn caused by the 2008-2009 global financial crisis.</p>
<p>The British economy would begin to shrink in the final quarter of 2022 and contract throughout all of 2023, making it the longest recession since after the global financial crisis.</p>
<p>Ushering in the slowdown, consumer price inflation was now likely to peak at 13.3 per cent in October &#8211; the highest since 1980 &#8211; due mostly to the surge in energy prices following Russia&#8217;s invasion of Ukraine.</p>
<p>That would leave British households facing two consecutive years of declines in their disposable incomes, the biggest squeeze since these records began in 1964.</p>
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