Bank of England should keep interest rate below 4.5% to avoid deep recession

Swati Dhingra, the newest member of the bank’s monetary policy committee, told the Observer newspaper that the UK could fall into a deep and prolonged recession if the Bank of England hikes interest rates to above 4.5%. 

She believes that the market may be underestimating how hard a 4.5% interest rate would hit the economy of the UK.

The central bank has recently enacted its eighth interest rate increase to combat inflation. The current interest rate in the UK is 3%. The next Bank of England's Monetary Policy Committee (MPC) meeting is scheduled for December 15. If it continues tightening of monetary policy, inflation could drag on for longer than initially expected and deepen. 

Dhingra also highlighted that withdrawal from the EU led to rising food prices and this triggered the cost-of-living crisis in Britain.