The Bank of England hiked interest rates by 0.25 percentage points to 4.5% on Thursday, raising borrowing costs to peak levels since 2008.

The annual inflation rate in the UK hit 10.1% in March, five times the 2% target set by the government.

The bank claimed that “a series of very large and overlapping shocks” have affected the economy.

The UK’s gross domestic product (GDP) is expected to remain stagnant during the first half of the year.

However, moderate growth is forecast in underlying output, which excludes the estimated effects of strikes and an additional bank holiday.

Despite a weaker February, economic activity has been less feeble than originally anticipated, said the bank.

It now predicts that the demand trajectory will likely be substantially more robust than previously predicted in the February Report, though still subdued when compared to historical norms.

Inflation is projected to fall sharply starting from April, in part as large rises in the price level one year ago drop out of the annual comparison.

“However, food price inflation is likely to fall back more slowly than previously expected,” it said.

Food inflation in the UK hit a 45-year high of 19.1% in March.