Bank of England hikes interest rates to highest level in 14 years

Sept. 22 (UPI) -- The Bank of England voted to raise interest rates Thursday amid concern that the British economy might be entering a recession during a pervasive energy crisis that's gripping most of Europe.

Britain's central bank voted to raise rates another 0.5%, to 2.25%, following an identical hike in August.

Thursday's was the bank's seventh straight rate hike since December, and the interest rates are at their highest level since 2008. The increase, however, was less severe than some economists expected.

Inflation concerns remain after Britain's economy slid by 0.1% in the third quarter of 2022, but that decline was considerably lower than the 0.4% dip that many predicted. The British economy had also declined 0.1% in the second quarter.

An economy is said to be in a recession when it records two consecutive declines in gross domestic product. Only certain agencies or officials, however, can make an official recession declaration.

The Bank of England cautioned last month that a recession was possible in the near future due to high inflation that's been driven by more expensive energy costs. Inflation is up about 10% in Britain over the past 12 months, according to the Office for National Statistics.

Excluding food and energy, prices in Britain were still up 0.8% from July to August, the ONS said, and were 6.3% higher year-to-year.

The Bank of England's hike on Thursday came a day after the U.S. Federal Reserve made a similar move. The U.S. central bank upped rates by 0.75% for the third consecutive meeting, and there is evidence to suggest that it may be helping.

Inflation in the United States has slowed in recent months to a little more than 8% year-to-year, but that's still substantially higher than the Fed's target of 2%.