The Bank of England has raised interest rates for a record-breaking 13th successive time, lifting the cost of borrowing to 5% and making loans, like mortgages and credit card debt more expensive.
The base interest rate is now at its highest in 15 years. Not since April 2008 has it been at this level.
The bank’s monetary policy committee on Thursday decided to lift the base rate by half a percentage point, an increase that just yesterday morning, before surprise inflation figures were announced, was seen as unlikely.
But the persistently high inflation rate and rising core inflation – which measures price increases without volatile energy and food – have put pressure on the bank to further increase rates to dampen economic inactivity in an effort to bring down price rises.
After yesterday’s inflation announcement, it was seen as a near 50-50 chance of the bank opting for a half or quarter percentage point increase.
