The Bank of England (BoE) has increased the base rate by 75 basis points to 3%.

The Monetary Policy Committee (MPC) voted by a majority of 7-2 to increase the bank rate by 0.75 percentage points, to 3%. The members in the minority voted to increase the bank rate by 0.5 percentage points to 2.75% and by 0.25 percentage points to 2.5%.

The increase marks the biggest since 1989 and the eighth time the bank has hiked rates.

Last year in November the base rate was just 0.1%.

The Office for National Statistics’ latest data shows that inflation increased from 9.9% in August back to 10.1% in September. 

The MPC minutes state: “The MPC’s latest projections described a very challenging outlook for the UK economy. It was expected to be in recession for a prolonged period and CPI inflation would remain elevated at over 10% in the near term.”

The Bank of England says inflation is “projected to pick up to around 11% in 2022 Q4, lower than was expected in August, reflecting the impact of the energy price guarantee”.

In September, the bank increased the base rate by 50 basis points to 2.25%. 

The next MPC meeting is scheduled on 15 December. 

The bank’s decision comes a day after the Federal Reserve in the US also confirmed it will increase interest rates by 0.75 percentage points for the fourth time in a row. 

The Federal Reserve’s latest increase brings the federal funds rate to between 3.75% and 4% after sitting at 0% for more than a year during the pandemic.