Earlier this week, the Bank of England raised interest rates by 50 basis points, the largest raise since 1995.
By 2025, the Bank expects headline inflation to fall to its 2% target before peaking at 13.3% in October.
In its decision, the Monetary Policy Committee cited higher inflationary pressures in the U.K.
Inflation is now expected to peak at 13.3% in October, then remain elevated at 2% until 2025.
A new 40-year high of 9.4% in U.K inflation was priced in during the August meeting.
According to the Bank, it plans to start selling government bonds this September, subject to policymakers final approval.
According to the forecast, the economy will contract during the course of 2023, following a peak-to-trough decline of 2.1% in 2022.
FTSE 100 index gained 0.4% after the news, despite sterling's 0.4% decline against the dollar.
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