UK Interest Rates rise to 1 percent amid Bank of England warning economy will go into reverse over cost of living crisis

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.

Three members called for a bigger increase to 1.25% due to worries over rocketing inflation, with the Bank ramping up its forecast for Consumer Prices Index (CPI) inflation to rise from 7% currently to over 10% in October - its highest level for 40 years - due to soaring energy prices.

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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.

The cost of living is rising for households across the UK.