The pound sterling dropped on Thursday after the Bank of England upped interest rates by the biggest increase in 27 years.

At the same time it delivered the rise in interest, the bank warned that a long recession was on its way amid skyrocketing inflation.

The Bank of England’s Monetary Policy Committee voted 8-1 to lift its key rate by 0.5 basis points to 1.75%.

Most members felt that a “more forceful policy action was justified” than in previous meetings. The action, which makes the cost of borrowing money more expensive, is aimed at combating rampant inflation fueled by soaring energy bills.

UK inflation was predicted to peak at just over 13% this year — the highest level since 1980. It had already jumped to a four-decade high of 9.4% in June.

“Inflationary pressures in the United Kingdom and the rest of Europe have intensified significantly” since May, the Band of England said.

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