INTEREST rates have risen by more than expected in a shock move as the Bank of England battles to slow soaring prices.
The Bank raised rates to five per cent from 4.5 per cent, the highest level in 15 years. Most analysts had expected a smaller rise.
Higher interest rates are intended to lower inflation, by giving mortgage-holders less to spend
The government’s target is to have inflation down to five per cent by the end of the year.
The decision takes the base rate, to which millions of loans are pegged, to its highest since 2008, with inflation stuck at almost nine per cent and proving harder for the Bank to tame toward its two per cent target.
Rates have been rising in the UK since December 2021.
“I understand the difficulty and the pain that causes for many people,” Bank of England governor Andrew Bailey said.
The move will lead to higher repayments for people with loans and many mortgage holders, but it should benefit savers if the rise is passed on.
Mr Bailey said that if the Bank did not raise rates now, ‘it could be worse later’.
