Bank of England poised to raise rates by most in 33 years

The Bank of England looks set to raise borrowing costs by the most since 1989 next week even as it prepares for a recession that could be deepened by spending cuts under new Prime Minister Rishi Sunak.

As well as raising interest rates on Thursday for an eighth meeting in a row to tame inflation above 10% - this time by three-quarters of a percentage point according to most analysts - the BoE is also due to become the world's first big central bank to start selling bonds from its stimulus stockpile on Tuesday.

After a period of turmoil in Britain, caused by the economic plans of former prime minister Liz Truss which sparked a bond market rout, the BoE's double-barrelled monetary tightening might look at odds with its current forecasts that the economy will be shrinking until 2024.

But with inflation still set to be way above the BoE's 2% target in 2023 and some of Truss's costly help for households and businesses still in place, the only way is up for borrowing costs.

"As things stand today, my best guess is that inflationary pressures will require a stronger response than we perhaps thought in August," BoE Governor Andrew Bailey said on Oct. 15.