Bank's biggest hike in rates for 27 years

BANK of England governor Andrew Bailey has insisted controlling rampant inflation is the "absolute priority" as policymakers delivered the biggest hike in interest rates for 27 years and warned over the longest recession since the financial crisis.

Mr Bailey said there are "no ifs, no buts" over the Bank's commitment to bringing inflation back to its 2% target as it warned that the Consumer Prices Index (CPI) will hit 13% later this year due to soaring gas prices.

Bank policymakers raised interest rates to 1.75% from 1.25%, the biggest single rise since 1995, as they tried to control the runaway inflation.

Consumer Prices Index (CPI) inflation will hit 13.3% in October, the highest for more than 42 years, if regulator Ofgem hikes the price cap on energy bills to around £3,450, the Bank's forecasters said.