Bank of England interest rate decision today.

The Bank of England looks on track to raise interest rates by three quarters of a percentage point to 3% later on Thursday, its biggest rate rise since 1989 as it battles the highest inflation in 40 years. The BoE has faced political and financial market turmoil since its last rate rise on September 22^nd, a day before former Prime Minister Liz Truss’s government launched an unfunded £45 billion package of tax cuts.

Markets are now more stable, with British government borrowing costs broadly back to where they were before the upheaval. On Tuesday, the BoE was able to begin selling bonds from its £838 billion quantitative easing stockpile.

However, fundamental problems for Britain’s economy remain. Consumer price inflation returned to a 40-year high of 10.1% in September and is likely to have risen further last month when regulated energy prices jumped, despite costly subsidies.

The UK interest rate decision comes after the Fed hiked interest rates by 75bps yesterday, lifting it to its highest rate since early 2008. The bank hopes pushing up borrowing costs will cool the economy and bring down price inflation. But critics are worried the moves could trigger a serious downturn.

Federal Reserve chairman Jerome Powell warned that rates were likely to move up again, saying that speculation that the bank might pause was “premature”. “We still have some ways to go,” he said at a press conference following the announcement. The US’s actions come as many other countries also raise rates in response to their own inflation problems, which have been fueled by a mixture of factors, including higher energy prices as a result of the war in Ukraine.

Meanwhile in Ukraine, Days after Russia suspended support for grain exports through the Black Sea, it has agreed with Turkey to restart its participation in the agreement. Russia accused Ukraine on Saturday of using a safety corridor for grain ships to attack its fleet in Crimea. However, the UN, Turkey and Ukraine continued sending ships even after Russia halted its support for the deal. Now, Russia’s defence ministry says Kyiv has given written assurances not to use the route for military action. But Germany’s foreign minister said it showed what the international community could achieve if it refused to be blackmailed by Russia.

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