The Bank of England will have to act on rates with the pound in virtual free fall

Sterling slumped to a three-year low against the dollar on Friday as the government prepared next week’s inflationary budget. A 0.75 percentage point rise in interest rates seeems likely this week, but the Monetary Policy Committee is not fond of aggressive moves

Is the Bank of England about to impose the sharpest rise in rates since 1989? (AP)

The Bank of England’s Monetary Policy Committee (MPC) belatedly gets to work this week after the delay caused by the suspension of its scheduled meeting “as a mark of respect” to the late Queen.

A large part of the City is betting on it imposing a 0.75 percentage-point increase in rates, the sharpest since 1989 as the government prepares an emergency budget, although there is a sizeable camp still banking on 0.5 percentage points.

In favour of the bigger number is the fact that central banks often hunt in packs. The US Federal Reserve, the European Central Bank and several of their peers have already imposed rises of this degree.