Important not to raise rates too high, say Bank of England

This comes a day after the BoE raised the base rate on borrowing, while also signalling that the Bank might be close to pausing a run of interest rate hikes which began in December 2021.

"We have to recognise that we have done a lot with monetary policy already," Pill told Times Radio.

Pill continued: “But of course it is also important that we guard against the possibility of doing too much. We need to keep that zen-like balance in our objective.

“We have to recognise that we have done a lot with monetary policy already. Interest rates have risen by almost 400 basis points over a little more than a year. And given the lags in the transmission of monetary policy, there is quite a lot of effects of those rises still to come through. There is a lot of policy in the pipeline.”

The base rate was risen to 4% yesterday (02 February), the highest level since 2008.

Speaking to Sky News, Andrew Bailey, governor of the Bank of England said: "I do see the signs that we’re turning a corner, and that obviously is encouraging but there’s a long way to go,", adding: "There’s still some very big risks out there."

Additionally, the Bank also upgraded its forecast for the UK economy on Thursday.

While it still predicts a recession 2023, it would be a shallow (as others have previously predicted), with overall growth falling by 0.5% in 2023, compared with its November forecast of a 1.5% fall.