THE Bank of England (BoE) has raised UK interest rates to a fresh 15-year high - from 5% to 5.25%.
The Bank’s Monetary Policy Committee (MPC) lifted the base rate by 0.25 percentage points on Thursday, taking it to 5.25%.
The last time it stood at 5.25% was in March 2008.
It is also the 14th consecutive rise in interest rates.
Around an estimated 300,000 Scottish households are expected to be impacted by the move.
Six members of the nine-strong MPC opted to increase the base rate by 0.25 percentage points.
But two others, Jonathan Haskel and Catherine Mann, voted for a bigger half-point increase, while one member, Swati Dhingra, preferred to keep the rate at 5%.
The MPC said that some of the risks from more persistent inflation, notably wage growth, had “begun to crystallise”, prompting it to push borrowing costs higher.
The policymakers also indicated that interest rates would need to stay higher for longer in order to bring inflation back down to its 2% target.
Chancellor Jeremy Hunt (pictured above) said: “If we stick to the plan, the bank forecasts inflation will be below 3% in a year’s time without the economy falling into a recession.
“But that doesn’t mean it’s easy for families facing higher mortgage bills so we will continue to do what we can to help households.”
Hunt said it was important not to “veer around like a shopping trolley” and follow the UK Government’s current path in order to meet its key goal of halving inflation.
On Thursday, the BoE said it expects the Government to meet that promise by the end of the year.
“Any rise in interest rates is a worry for families with mortgages, for businesses with loans…" Hunt told broadcasters.
"What the Bank of England governor is saying is we have a plan that is bringing down inflation, solidly, robustly and consistently.
“So the plan is working, but what we have to do as a Government is that we stick to that plan, we don’t veer around like a shopping trolley.”
Labour's 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.”
An estimated 115,000 Scottish households are on standard variable rate mortgages, while 85,000 are on tracker loans, which fluctuate alongside the base rate set by the BoE.
There are an additional 120,000 households in Scotland with fixed-rate mortgages due to expire this year, who will be "particularly badly hit", the Scottish Greens said.
“The Tories are failing Scotland. They are failing our communities and households," Maggie Chapman (pictured below), the party's economy spokesperson said.
"This cost of Tory crisis is getting worse with every day they spend in government.
“The Tories talk aspirationally about home ownership, but they are failing to support that aspiration as they have delivered the highest interest rates for a generation.
“After 13 years of misrule from successive Tory governments, we are living through the dire consequences of their brutal economic policies.
“Hundreds of thousands of households and families all over the country have already been plunged into poverty and debt as a result of Tory failures. Today’s announcement will only increase the pressure and anxiety they are feeling."
Lily Megson, policy director at My Pension Expert, said that the latest rise means "more pain for borrowers" but "ought" to be good news for savers.
However, she cautioned: "Yet ‘ought’ is the imperative word here. Sadly, despite the Bank of England pushing the base rate higher and higher in its fight against inflation, many high street banks are continuing to fail to pass on these advantages to their customers.
"This is deeply disappointing, adding to the financial strain on savers in the midst of a cost-of-living crisis that is far from over."
The pound, which was already trading lower on Thursday, weakened further after the rate hike, down 0.5% at 1.26 US dollars and 0.4% lower at 1.16 euros.
