The 50 basis points increase to 1.75% will be the largest interest rate in 27 years and will speed up a historic tightening of monetary policy to tackle the highest level of inflation experienced in four decades. 

In June, inflation reached 9.4%, with the BoE predicting it will rise again to 11% before the year ends. 

In a comment, BoE governor Andrew Bailey said, “The Committee will be particularly alert to indications of more persistent inflationary pressures, and will, if necessary, act forcefully in response. Bringing inflation back down to the 2% target sustainably is our job, no ifs or buts.”

The BoE has already raised interest rates on five occasions in the past seven months — a record amount that is putting substantial pressure on people who have borrowed funds.

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"If you want to invest in these assets, okay, but be prepared to lose all your money,"  Bailey said to the public accounts committee (PAC) on Monday.

"People may still want to buy them because they have extrinsic value [...] people value things for personal reasons. But they don't have intrinsic value."

"This morning we have seen another blow-up in a crypto exchange," Bailey went on to say.

Bailey’s warning comes as Bitcoin and other cryptocurrencies continue to fall in price after crypto exchange Binance paused all withdrawals, citing “extreme market conditions.”

Bailey also told MPs on the PAC that artificial intelligence tools could potentially be used to create automatic control on cryptocurrencies that are deemed to be suspicious. 

Bitcoin hit an 18-month low, falling as much as 17% in under 24 hours to £18,540. The world’s biggest cryptocurrency is now down more than 49% this year. 

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While attending the World Bank and IMF spring meetings in Washington on Thursday, Bailey said the BoE is striking a difficult balance between combating inflation and tackling the threat of recession. He also voiced concerns over increasing wages keeping inflation higher for longer.  

"We are now walking a very tight line between tackling inflation and the output effects of the real income shock, and the risk that that could create a recession and pushes too far down in terms of inflation," Bailey said at the Peterson Institute for International Economics.

While officials have begun to tone down their language on the need for further rate hikes, Bailey did point to another rise next month. The BoE has already increased interest rates on three occasions since December. Some traders believe the bank is looking to adjust rates from their current 0.75% level to 2.5% by this time next year. 

In March, consumer price inflation hit a record 7%, over three times higher than the BoE’s target of 2%. 

Speaking to the BBC, Bank of England Governor Andrew Bailey said he does not expect the cost of living crisis to ease until next year.

“It is going to be a difficult period ahead, I readily admit, because we are already seeing, and we're going to see, a reduction in real income,” Bailey told the BBC. 

“We're going to start coming out of it in 2023, and two years from now, we expect inflation back to a more stable position. 

“Inflation, the rate at which prices are rising, is expected to peak at 7.25% in April, more than three times its target of 2%, and average close to 6% in 2022. 

“This is a world of external prices rising, reducing people's real incomes,” Bailey added.

Bailey also suggested that workers should not ask for big pay rises to cope with the rising cost of living. However, this comment has come up against a wave of criticism, with the TUC calling Bailey's advice on pay restraint “ill-founded.”