The Bank of England has hiked UK interest rates to 4% - its tenth rise in a row as it battles against inflation and soaring prices.
The base rate was increased from 3.5% and remains at its highest level since 2008.
But the Monetary Policy Committee (MPC) policymakers, who decide the bank rate, appeared to hint that borrowing costs may now be near their peak.
In its update today, the MPC said it would only raise rates further "if there were to be evidence of more persistent [inflationary] pressures" than already forecast.
But it didn't say it would respond "forcefully" to these pressures, as the committee had said in previous meetings.
Markets expect interest rates to peak at 4.5% towards the end of this year - down from the 5.25% that had been forecast following the Mini-Budget.
Banks and lenders change the interest rates on their savings and borrowing products in line with the base rate.
This means when the base rate goes up, borrowing money becomes more expensive.
This is particularly bad for homeowners with a variable rate mortgage - but in some good news, savings rates have gone up.
The base rate stood at just 0.1% in December 2021.
MPC members voted by a majority of 7-2 to increase it by 0.5 percentage points. Two policymakers voted to keep the interest rate at 3.5%.
Alongside its latest rate rise, the MPC today said the recession the UK is expected to fall into this year will be shorter than previously thought.
It is predicting a recession of five consecutive quarters - starting in the first three months of 2023 - with gross domestic product (GDP) falling by 0.5% this year.
This is compared with its November forecast of a 1.5% decline.
The softened forecast is down to wholesale energy prices having fallen significantly and inflation beginning to fall from its peak.
Inflation was last month confirmed to have dipped again to 10.5% - down from a 41-year high of 11.1% - but is still five times above the 2% target.
The Bank of England is raising interest rates to try and lower inflation, which is being pushed up by higher energy, food and fuel prices.
By raising interest rates, the theory is that households will spend less and this should mean inflation will drop.
What it means for your mortgage
If you have a tracker mortgage, then your monthly repayments will become more expensive as these types of deals move in line with the base rate.
If you're on a standard variable rate (SVR) mortgage, then you'll likely see your rates go up too - but it is down to your lender to pass on any rises.
You'll usually be on an SVR type mortgage deal after your fix or tracker rate ends.
Around two million homeowners are on a variable deal right now.
If you have a fixed-rate mortgage, your rates won't change while you're still in your current deal.
However, you will likely see your monthly repayments soar when you come to remortgage due to how much rates have risen.
The typical two-year fixed rate mortgage has fallen to 5.45% from a peak of 6.65% in October, according to Moneyfacts.
Five-year fixes have dropped from a high of 6.51% in October to 5.2% now.
Paul Broadhead, Head of Mortgage & Housing Policy at the Building Societies Association, said: “Another bank rate rise, the tenth since December 2021, will be unwelcome news for many homeowners.
“Although the majority of borrowers are on fixed rates, so will not feel the impact of the rate increases until their fixed rate ends, when they do their new rate is likely to be significantly higher than their current fixed rate.
“For example, it’s likely to cost those at the end of a two-year fixed rate who re-mortgage to a new similar deal around £200 more a month.
“For those on five-year fixed rates, their re-mortgage is likely to increase their payments by around £160 a month.“
If you're a renter, you may find your landlord decides to increase your rent if their mortgage has risen as a result of the rate hike.
For a rolling tenancy, your landlord can't normally increase your rent more than once a year without your agreement.
For a fixed-term tenancy your landlord can only increase the rent if you agree - if you say no, they can put it up after your fixed term ends.
What it means for your debts
The interest rate on most credit cards is variable and will change from time to time anyway.
Credit cards are not historically linked to the base rate - but in recent years, some lenders have started to do this.
You should get 30 days’ notice if your interest rate is going up.
Check the terms and conditions of your credit card to see what could happen to your rate.
Over the last year, interest rates on credit cards have been getting more expensive due to the cost of borrowing going up.
This means if you need to take out a new credit card, the deals on offer today will be worse compared to a year ago.
The average annual percentage credit card rate is now 30.4%, according to Moneyfacts.
Alice Haine, personal finance analyst at Bestinvest, said: "If a credit card interest rate rises, those with hefty debts could explore signing up for a 0% balance transfer credit card that clears the debt with no interest applied for a set period.
"Lenders can be cautious about issuing these cards, with the more generous 0% periods on the wane and balance transfer fees also edging up, but they can offer respite for consumers."
Interest rates on most personal loans and car financing are normally fixed - but again, most lenders are now advertising higher rates than before.
Ms Haine continued: "Personal loan rates are also edging up, so locking in a good deal now would be wise.
"Remember, the best strategy when it comes to debt is to borrow as little as possible over the shortest time possible at the lowest rate possible."
What it means for your savings
The one positive of interest rates going up is that savings rates have slowly been rising.
But savings rates are still painfully below the level of inflation - so your money is still being eroded elsewhere.
The best easy-access rate right now is 3.03% on up to £85,000 of savings from Kroo, or Yorkshire Building Society pays 3.35% but only on up to £5,000.
You might be able to beat these rates depending on who you bank with.
For example, the Barclays Rainy Day Saver offers 5.12%, the Nationwide FlexDirect current account pays 5% and the Santander Edge Saver is 4%.
Fixed accounts pay more but the rate you get in interest won't go up if there are future Bank of England base rate rises.
The best-paying fixed rate deal is 4.5% from Isbank via Raisin for a five-year fix.
Fixed rate deals are also slowly starting to fall - the top-paying account paid over 5% back in October 2022.
Myron Jobson, senior personal finance analyst at Interactive Investor, urged savers to act now as some banks have been slow to pass on rate rises.
He warned: “It could take months for the increase in interest rates to trickle through to savers – if at all.
“The acceleration in the frequency of rate rises has meant that some savings providers may still be catching up to past base rate rises.“
