People who are not on fixed-term mortgage deals are set to be hit by a hike in interest rates after the Bank of England announced an rise from 0.5 per cent to 0.75 per cent. It is the third rise in a row as members of the Bank's Monetary Policy Committee voted eight to one to increase rates.
One policymaker voted to keep rates at 0.5 per cent amid fears over the impact of the cost-of-living squeeze on wider economic growth as households and businesses are expected to rein in spending due to soaring costs. In minutes of the latest decision, the Bank signalled that more rate rises might be needed as it laid bare a gloomy inflation outlook, with the Consumer Prices Index now set to reach around eight per cent in the second quarter.
It said that, if wholesale energy prices continue to soar, UK inflation could rise even further by the end of the year and potentially be "several percentage points higher" than the 7.25 per cent peak forecast last month.
