Interest rates: The Bank of England has set its seventh rate hike since December

Market opinion is divided on whether the central bank will repeat last month’s half-percentage-point increase — the biggest increase in 27 years — or go for a three-quarter hike.

Economists polled by Reuters last week expected the bank to raise rates to 2.25% from 1.75%, while financial markets pegged the hike to 2.5%.

Either way, the Bank of England will raise borrowing costs for businesses and consumers to return to levels last seen in 2008 in a bid to take the heat off inflation, which remains below 10%.

Like most of its senior peers, the central bank has to weigh the damage caused by price hikes getting out of hand and aggressive rate hikes. Some economists believe that the UK economy is already in recession.

His decision is further complicated by the weak pound, which fell to a 37-year low against the US dollar on Wednesday. A weaker currency means the UK has to pay more for imported energy and food, adding inflationary pressure to the economy.

The US Federal Reserve on Tuesday announced a historic third consecutive three-quarter percentage point hike in interest rates, adding further wind to the dollar’s sails. Benchmark rates are now between 3% and 3.25%, compared to 1.75% in the UK.

The European Central Bank also broke new ground earlier this month with its latest decision to raise interest rates in the Eurozone from 0% to 0.75%.

Further dimming the Bank of England’s outlook is likely to be increased UK government spending to reduce energy bills for businesses and households.

UK Finance Minister Kwasi Kwarteng will set out the cost of the bailout program on Friday, but analysts have already estimated the bill could be £150 trillion ($170 trillion) over the next two years.

Coupled with the tax cuts promised by new Prime Minister Liz Truss, inflation could remain high in the coming years and UK government borrowing could rise.

In a report published on Wednesday, the independent Institute for Fiscal Studies warned that the government risked setting the UK’s debt on an “unsustainable path”.

“At about 3.5% of national income, borrowing would not be far from double the 1.9% average national income in the 60 years before the global financial crisis, when growth prospects were considerably higher,” he said.