The Bank of England (BoE) has raised interest rates for the second time in three months to 0.5%, up from 0.25% previously.
The BoE Monetary Policy Committee (MPC) confirmed it voted by a majority of 5-4 to increase Bank Rate by 0.25 percentage points, to 0.5%. Interestingly, it revealed those members in the minority preferred to increase Bank Rate by 0.5 percentage points, to 0.75%.
The news comes as the BoE said inflation is on course to hit a 30-year high, and is expected to peak at 7.25% in April, and average close to 6% throughout 2022.
The news will come as a further dampener to UK households who are seeing one of the most notable rises in the cost of living in the past few decades.
Commenting on the decision, Alpesh Paleja, CBI lead economist, said: “A rise in interest rates comes as no surprise. It’s likely that the Bank of England will tighten monetary policy again in the near future, with strong price pressures and further rises in inflation over the coming months a near-certainty.
“The resulting cost of living squeeze will hit the poorest households hardest, so it’s good to see the government taking steps to help the most vulnerable.But more broadly, it’s important that the Government sets higher longer-term ambitions for the economy, so that we break the current cycle of low underlying growth and higher taxes.”
Earlier today it was revealed the energy price cap is set to increase by 54% from 1 April amid a “record” increase in global gas prices, in a move that is set to affect approximately 22 million customers.