Bank boss says ‘absolute priority’ to control inflation as rates jump to 1.75%

The dire economic conditions will see real household incomes drop for two years in a row, for the first time since records began

INFLATION RATES JUMP: Governor of the Bank of England, Andrew Bailey, during the Bank of England's financial stability report press conference

In the biggest single rise since 1995, bank policymakers raised interest rates to 1.75% from 1.25% as they tried to control the runaway inflation. He said: “I recognise the significant impact this will have, and how difficult the cost-of-living challenge will continue to be for many people in the United Kingdom.

The dire economic conditions will see real household incomes drop for two years in a row, the first time this has happened since records began in the 1960s. They will drop by 1.5% this year and 2.25% next.However, the recession will at least be shallower than the 2008 crash, with GDP dropping up to 2.1% from its highest point. The Bank said the depth of the drop is more comparable to the recession in the early 1990s.

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