Interest rates rise as Bank of England warns of further action to curb inflation

The Bank of England has increased interest rates for the ninth consecutive time since December 2021 – from 3% to 3.5%.

The Monetary Policy Committee (MPC) voted by a majority of 6-3 to implement the rise, which comes as a time when the cost of living continues to soar.

In a three-way split, two members preferred to maintain the rate at 3%, and one member preferred to increase Bank Rate by 0.75 percentage points, to 3.75%.

Financial analysts believe rates could go even higher and reach 4.5% by the middle of next year as inflation continues to cause problems for the Government and the Bank of England. Earlier this week, new figures showed that inflation was running at 10.7% – more than five times the Bank’s target of 2%.

Today’s rise sees interest rates running at their highest level since October 2008.

A statement from the Bank of England said: “The majority of the Committee judges that, should the economy evolve broadly in line with the November Monetary Policy Report projections, further increases in Bank Rate may be required for a sustainable return of inflation to target.

“There are considerable uncertainties around the outlook. The Committee continues to judge that, if the outlook suggests more persistent inflationary pressures, it will respond forcefully, as necessary.

“The MPC will take the actions necessary to return inflation to the 2% target sustainably in the medium term, in line with its remit. The Committee will, as always, consider and decide the appropriate level of Bank Rate at each meeting.”

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