The Bank of England heaped further pressure on mortgage holders today (Thursday) as it hiked interest rates again in yet another bid to get inflation under control.
The Bank warned of “crystallising” risks which were pushing inflation upwards as it decided to increase its base rate to 5.25% from 5%. It is the 14th rate increase in a row.
But in a good sign for the Prime Minister, the Bank said it expects the government to meet its promise to halve inflation by the end of the year.
The Consumer Prices Index will probably fall below 5% in the final quarter of 2023, it said.
Bank Governor Andrew Bailey said: “Inflation is falling and that’s good news.
“We know that inflation hits the least well off the hardest and we need to make absolutely sure that it falls all the way back to the 2% target.
“That’s why we’ve raised rates to 5.25% today.”
Six members of the nine-strong Monetary Policy Committee (MPC) opted to increase the base rate by 0.25 percentage points.
However, in an unusual three-way disagreement, two members voted to hike the rate further, while one wanted to keep it unchanged.
Campaigners from Positive Money demonstrated outside the Bank of England in London against the rises in interest rates amid the cost of living crisis.
They are demanding the government introduce a windfall tax on bank profits.
Shadow chancellor Rachel Reeves said: “This latest rise in interest rates will be incredibly worrying for households across Britain already struggling to make ends meet.
“The Tory mortgage bombshell is hitting families hard, with a typical mortgage holder now paying an extra £220 a month when they go to re-mortgage.
“Responsibility for this crisis lies at the door of the Conservatives that crashed the economy and left working people worse off, with higher mortgages, higher food bills and higher taxes.”
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