Bank of England raises rates to 2.25%, despite likely recession

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Reuters UK

LONDON (Reuters) -The Bank of England raised its key interest rate to 2.25% from 1.75% on Thursday and said it would continue to “respond forcefully, as necessary” to inflation, despite the economy entering recession. The BoE estimates Britain’s economy will shrink 0.1% in the third quarter – partly due to the extra public holiday for Queen Elizabeth’s funeral – which, combined with a fall in output in the second quarter, meets the definition of a technical recession. Economists polled by Reuters last week had forecast a repeat of August’s half-point increase in rates, but financial markets ha…

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