The Bank of England on Thursday hiked its interest rate by half a point to 3.5 percent, the highest level in 14 years, in a bid to cool sky-high inflation to smooth the economic condition.

The increase was the BoE’s ninth in a row, while the amount matches a hike Wednesday by the US Federal Reserve. The European Central Bank announces its latest rate decision at 1315 GMT.

“The labour market remains tight and there has been evidence of inflationary pressures in domestic prices and wages that could indicate greater persistence and thus justifies a further forceful monetary policy response,” the BoE said in a statement following its latest rate call.

The hike was less than in November when it lifted borrowing costs by 0.75 percentage points. he Fed also slowed the pace of its tightening on Wednesday, as inflation eases on both sides of the Atlantic.

The BoE on Thursday added it expects the UK economy to contract 0.1 percent in the fourth quarter, better than its previous forecast for a contraction of 0.3 percent. The UK government has said the British economy is in a recession that it expects to carry on into next year on fallout from rocketing energy and fuel bills.

UK inflation stands at 10.7 percent, the highest level for around 40 years, with prices surging on supply constraints caused by Russia’s invasion of Ukraine, the lifting of pandemic lockdowns and Brexit fallout, according to economists.

Soaring prices are eroding the value of wages, causing public and private sector workers to go on strike in an attempt to secure higher salaries. While boosting savers, rising interest rates are increasing loan costs for individuals and businesses.

“To make matters worse, higher mortgage payments will come on top of all the other soaring costs — from food to fuel,” noted Sarah Coles, senior personal finance analyst at stockbroker Hargreaves Landowner.

UK nurses on Thursday staged an unprecedented one-day strike as a “last resort”, despite warnings it could put patients at risk. It follows fresh walkouts by railway staff, while planned stoppages by passport control and postal workers spell Christmas misery for millions of Britons.

The UK consumer prices index eased in November from October’s annual inflation rate of 11.1 percent, official data showed on Wednesday. The BoE meanwhile began to raise its rate in December last year, when it had stood at a record-low 0.1 percent.

Paul Dales, chief UK economist at Capital Economics, said on Thursday that he expected the BoE to keep on hiking up to a peak of 4.5 percent early next year, as inflation remains at historically-high levels.