CAIRO: The Bank of England raised interest rates by the most in 27 years on Thursday, despite warning that a long recession is on its way, as it rushed to smother a rise in inflation now set to top 13 percent.

Reeling from a surge in energy prices caused by Russia’s invasion of Ukraine, the BoE’s Monetary Policy Committee voted 8-1 for a half percentage point rise in Bank Rate to 1.75 percent — its highest level since late 2008 — from 1.25 percent.

The 50-basis-point increase had been expected by most economists in a Reuters poll as central banks around the world scramble to contain the surge in prices.

Irish unemployment falls to 21-year low of 4.2 percent

Ireland’s unemployment rate fell to a 21-year low of 4.2 percent in both May and July, new and revised data from the Central Statistics Office showed on Thursday.

Provisional data had shown the jobless rate hovering at the level it stood at before the COVID-19 pandemic before the May reading was revised down to 4.2 percent from 4.7 percent and June amended to 4.3 percent from 4.8 percent previously.

“Despite inflationary pressures and the ongoing war in Ukraine, the rate of unemployment is expected to continue its downward trajectory in coming months,” Jack Kennedy, economist at global job site Indeed, wrote in a note.

UK construction activity falls by most in over two years 

British construction companies reported their biggest fall in activity in more than two years last month, as house-builders scaled back work and civil engineering firms faced a dearth of new contracts, a survey showed on Thursday.

July’s S&P Global/CIPS construction Purchasing Managers’ Index also showed some easing in inflation pressures.

Brazil central bank hikes rates, weighs one more amid election-year spending

Brazil’s central bank on Wednesday raised interest rates by 50 basis points as widely expected, and left the door open for a smaller “residual” hike in September, pumping the brakes on an economic recovery as the October election approaches.

The bank’s rate-setting committee, known as Copom, raised its benchmark Selic interest rate to 13.75 percent, the highest since January 2017, as forecast by 23 of 29 economists in a Reuters poll. 

The Brazilian central bank has hiked rates at 12 straight policy meetings from a record-low 2 percent in March 2021, battling inflationary pressures from global commodity prices and now an election-year spending spree by President Jair Bolsonaro.