The Bank of England (BoE) has raised the base interest rate from 4.5% to 5%, a steeper increase than most forecasters expected.
In a meeting on Thursday (23 June), the Bank's Monetary Policy Committee voted to raise the rate by a majority of seven to two, marking the 13th consecutive interest rate hike since December 2021.
According to the BoE, tightening monetary policy is necessary to bring inflation down to the Government's 2% target.
In a statement on Thursday, Prime Minister Rishi Sunak stressed the importance of halving inflation by the end of the year, but added that the task had "got harder" in recent months.
As prices remain stubbornly high, the Bank could increase the base rate further later this year, with the next MPC meeting scheduled for 3 August.
Commenting on the effects on households and businesses, the BoE said:
"The committee is continuing to monitor closely the impact of the significant increases in the Bank rate so far.
"As set out in the May report, the greater share of fixed-rate mortgages means that the full impact of the increase in Bank rate to date will not be felt for some time."
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