The Bank of England has raised interest rates for the fifth time in a row to 1.25% as it fights against mounting inflation.
There had been speculation of a more aggressive tightening after the sharpest rate hike since 1994 was imposed by counterparts at the US central bank last night.
Bank rate was raised by 0.25% as financial markets and economists had expected, continuing the gradual increases that began in December last year as the rate of inflation gathered pace.
The reopening of economies after the pandemic and, latterly, the effects of Russia’s war in Ukraine have been responsible for the bulk of the soaring costs across the global economy.
The UK’s main inflation measure has since hit a 40-year high, leaving economic growth intensely choked by a cost of living squeeze that is only tipped to intensify as energy, food and fuel bills rise sharply.
The Bank’s action will mean there is further pain for millions of mortgage holders on deals that track Bank rate but some small relief for savers.
Although many of the price increases are outside the Bank’s control, it is keen to keep a lid on rises in wages for fear that levels matching the pace of price increases will only make the inflation problem worse.
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Its plea for wage restraint has come under attack from unions, which argue that plunging living standards are no fault of their members.
The rail network is set to become the first national battleground in strike action expected to start next week.
