The Bank of England raised borrowing costs by more than expected on Thursday in a move which will hit borrowers hard and has sparked fears the British economy may be heading for recession.

The half-point increase is the bank’s 13th hike in a row and twice what economists predicted.

Figures on Wednesday showed UK inflation unexpectedly holding steady at 8.7 per cent, fuelling concerns over the outlook for prices after predictions for a modest decline to 8.4 per cent. 

Meanwhile, Turkey’s central bank has nearly doubled its main interest rate in a major reversal from the unconventional economic policies originally promoted by President Recep Tayyip Erdogan.

The bank hiked its key rate to 15 per cent from 8.5 per cent after it had promised to “simplify and improve” policies that past Erdogan governments used to try and weather Turkey’s worst economic crisis since the 1990s.

It added that this was only the start of a process aimed at bringing Turkey’s annual inflation rate of nearly 40 per cent to single figures “as soon as possible.”

Turkey’s annual inflation rate reached 85 per cent late last year and the central bank burned through most of its reserves trying to prop up the lira which was down 90 per cent against the dollar over 10 years.