UK <a href="https://www.thenationalnews.com/tags/interest-rates" target="_blank">interest rates</a> are set for the biggest interest rate rise since the 1980s on Thursday as the Bank of England tries to control <a href="https://www.thenationalnews.com/tags/inflation/" target="_blank">inflation</a> that is battering British households. The nine members of the Monetary Policy Committee will make a decision that could increase the amount that millions of <a href="https://www.thenationalnews.com/tags/mortgages/" target="_blank">mortgage</a> holders have to pay their banks every month. The Bank is expected to push up the <a href="https://www.thenationalnews.com/world/uk-news/2022/09/22/bank-of-england-raises-uk-interest-rates-to-225-per-cent/" target="_blank">UK’s base interest rate from 2.25 per cent</a> to 3 per cent, the highest since 2008. Mortgages are decided against this rate. If, as expected, the bank raises interest rates by 0.75 percentage points, it would be the biggest single increase since 1989. It will also be the eighth time in a row that the bank raises interest rates. Less than a year ago, the rate was 0.1 per cent. This month, markets had predicted the increase could be as much as one percentage point but sentiment has calmed somewhat after the change of chancellor and prime minister, and <a href="https://www.thenationalnews.com/business/banking/2022/10/19/bank-of-england-blindsided-by-mini-budget-and-tax-cuts/" target="_blank">Bank of England bond purchases pushed down on the cost of borrowing</a>. Markets have also witnessed a decreased appetite for large rises globally, with the Bank of Canada increasing its rate by 0.5 percentage points, below the 0.75 percentage point rise that had been widely predicted. Nevertheless, last month Bank of England Governor Andrew Bailey said it was likely the rise in interest rates could be bigger than the 0.5 percentage point increase to 2.25 per cent at the previous meeting. “As things stand today, my best guess is that inflationary pressures will require a stronger response than we perhaps thought in August,” Mr Bailey said on October 15. Analysts at Deutsche Bank have said they expect the Bank of England to opt for a 0.75 percentage point rise with a split vote. Experts at the lender said they expected latest forecasts from the Bank of England, which will also be revealed on Thursday, to show that “the economic outlook has deteriorated further”. “Conditioned on market pricing, the UK economy will likely fall into a deeper and more prolonged recession,” the analysts said. The bank will also confirm its inflation expectations for the longer term, which are due to show that the cost of living will be much higher than the central bank’s 2 per cent target next year. James Smith, developed markets analyst at ING, also had a downbeat prediction for Bank’s latest economic outlook. “The new set of forecasts due, which crucially are based on market interest rate expectations, are likely to be dismal, showing both a deep recession and inflation falling below target in the medium term,” Mr Smith said. “That should be read as a not-so-subtle hint that market pricing is inconsistent with achieving its inflation goal.”