The Bank of England raised interest rates by 0.50% yesterday, taking the Bank of England base rate to 2.25%, its highest level since 2008. Further hikes are expected in the coming months with analysts now forecasting a peak of 4.80% next year.
The vote was split, with some members arguing for an even bigger move yesterday.
The Bank will also start to unwind its Quantitative Easing (QE) program next month, despite acknowledging the economy may already be in a technical recession.
Recent economic data has highlighted the extent of the challenges facing the central bank as they balance high inflation and a tight job market, against slowing retail sales and an ongoing squeeze on household budgets.
Today the focus turns to the government fiscal policy as the chancellor lays out plans to support and grow the economy. However, there are concerns over the fiscal credibility of how this will be funded, with government debt levels already uncomfortably high.
In the US, the Fed raised interest rates by a further 0.75% as they continue their path of aggressive policy tightening, raising the expected peak in rates to 4.60% next year as they fight to bring down stubbornly high inflation.
The European Central Bank are also set to continue their cycle of forceful rate hikes despite the grim economic outlook and the huge concerns over gas supplies and risks of a further escalation of the war.
