UK interest rates have increased to 2.25% - the seventh time in a row the Bank of England has raised rates in an attempt to tame rising prices.

The rate has been lifted by half a percentage point from 1.75% and takes borrowing costs to their highest levels since 2008 during the global financial crisis.

Interest rates have been rising since last December as inflation has swelled to its worst level in four decades.

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The Bank of England is set to announce in the next 10 minutes its decision on interest rates.

As well as affecting mortgages and savings accounts, interest rates also influence the interest charged on things like credit cards, bank loans and car loans.

Ahead of the Bank of England's announcement, the average annual interest rate is 19.9% on bank overdrafts and 18.57% on credit cards in July.

Following today's decision, lenders could decide to increase these fees if interest rates rise again.

Read more on how interest rates could affect you here.

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Moving away from the Bank of England's interest rates announcement for a moment, landlords will be legally required to pass on to businesses the cut in wholesale prices contained in the government's energy bill support package, the business secretary.

Tory MP Jason McCartney sought guarantees that small businesses based in former textile mills in Colne Valley would receive the support due to them.

Jacob Rees-Mogg, the new business secretary, who has been making a statement in the Commons about lifting the ban on fracking, replied: "We will legislate so that landlords are obliged to pass on the cut in wholesale prices."

On Wednesday, the government said legislation would be used to force landlords to pass on the £400 energy rebate to domestic tenants who pay all-inclusive bills for rent and overheads.

Inflation is at a near 40-year high, driven largely by the rising cost of food and fossil fuels, with prices in August 9.9% higher than they were 12 months ago.

The Bank of England Governor, Andrew Bailey, has said "the Russia shock is now the largest contributor to UK inflation".

But economists agree that there are many factors, including:

• energy bills, which have risen rapidly because of high oil and gas prices. Bills will rise further in October, but not by as much as previously planned
• petrol and diesel prices, partly because the war in Ukraine has driven up the cost of crude oil. Prices recently fell from record levels but are expected to remain high
• food prices, as the war in Ukraine squeezes grain production and costs
• the cost of used cars, external has also gone up sharply
• significant increases in the costs of raw materials, household goods, and furniture and in the hospitality sector, including restaurants and hotels
• higher interest rates - making mortgage payments more expensive for some homeowners

Not all prices behave the same way. The cost of some other goods and services have increased only slightly or stayed the same.

Read more.

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Most people who have a mortgage are on a fixed-rate arrangement, meaning the price they pay will not change until their deal ends.

But that’s not the case for everyone.

If rates are raised by 0.5% to 2.25%, those on a typical tracker mortgage would have to pay about £49 more a month. Those on standard variable rate mortgages would see a £31 increase.

If the interest rate rises by 0.75% to 2.5% people with a tracker mortgage will see their monthly payments rise by around £73 while those on a standard variable rate will shell out £46 more.

And that comes on top of all the other rate rises since December.

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The UK is not the only place where interest rates are increasing, prompting the World Bank to issue a warning last week that global rate hikes could trigger a recession in 2023.

On Thursday, it said the global economy was in its steepest slowdown following a post-recession recovery since 1970.

As with the UK, inflation in the United States hit a 40-year high in recent months.

Yesterday, the US Federal Reserve announced it was raising its key rate by another three-quarters of a percentage point, lifting the target range to between 3% and 3.25%.

Elsewhere, Sweden's central bank set the tone for the week by raising rates by a full percentage point on Tuesday.

Earlier this month, the European Central Bank announced a record rise in eurozone interest rates, lifting all its key rates by three-quarters of a percentage point.

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Sir John Gieve, who helped set interest rates between 2006 and 2009, predicts the Bank of England will raise interest rates by three quarters of a percentage point.

That’s at the top end of expectations and would be the biggest rise since 1989.

But Gieve, who was a member of the Bank’s rate-setting Monetary Policy Committee just before and during the worst months of the global financial crisis, tells the BBC he expects rates to rise further still.

“I’m expecting interest rates to continue to rise in future meetings and I think the markets are generally expecting interest rates to rise to over 3% by the end of this year,” he says.

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Chancellor Kwasi Kwarteng is reportedly preparing to announce that 120,000 benefit claimants will have to take active steps to find work or risk losing their benefits when he sets out his mini-budget on Friday.

Asked about the reports on LBC radio, Deputy Prime Minister Therese Coffey said the government wants to get more people "working in many unfilled vacancies as well as people doing a very limited amount of work today".

"That is why we continue to extend the number of people who are currently on benefits about how we can help them find perhaps higher-paid work or about taking up more hours," she said.

Read more.

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Following today’s announcement from the Bank of England, Chancellor Kwasi Kwarteng will deliver a mini-budget tomorrow.

Friday’s “fiscal event” is expected to deliver tax cuts promised by Liz Truss during her Conservative leadership campaign, as well as providing more details on the size of the government's energy support package.

The new PM has vowed to cut taxes, arguing that doing so will help boost the economy, and to help people with rising living costs.

Truss has promised to use the fiscal event to undo the rise in National Insurance brought in by her predecessor Boris Johnson.

She has also said she would temporarily scrap green levies on energy bills, in a bid to bring down prices for consumers.

Read more.

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The cost of living is rising worldwide, with a sharp rise in oil and gas costs - a problem made worse by Russia's invasion of Ukraine.

One way to try to control rising prices - or inflation - is to raise interest rates.This increases the cost of borrowing and encourages people to borrow and spend less.

It also encourages people to save more.

However, it is a tough balancing act, as the Bank does not want to slow the economy too much and potentially prompt a recession.

Since the global financial crisis of 2008, UK interest rates have been at historically low levels. Last year, they were as low as 0.1%.

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The Bank of England and Liz Truss's government seem to be set on two opposing paths, according to Sir John Gieve, the former deputy governor of the Bank.

"The Bank of England is worried about inflation which is around 10%. It is supposed to be around 2% so it is a massive overshoot...so they are trying to slow down the economy," he tells the BBC.

On the other hand, Truss's new Chancellor Kwasi Kwarteng wants to boost economic activity and on Friday is expected to use a mini-budget to announce tax cuts, how much it will cost to help homes and businesses with rising energy bills and other measures. Public borrowing will rise further to pay for the interventions.

Gieve adds: "The rhetoric we’ve heard so far from the new government is they want to speed it up by increasing borrowing so yes, the two main instruments of policy are pulling in different directions."

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The Bank of England raised rates to 1.75% in August and is expected to increase them again - potentially to 2.25% or even 2.5%.

To give an idea of what that might mean, a quarter-percentage point rise on a £250,000 standard variable rate mortgage, paid back over 25 years, could mean paying an extra £30 a month, explains Andrew Montlake, of Coreco mortgage brokers.

People on a fixed-rate mortgage also face problems. "We're starting to see 'payment shock'," Montlake told BBC News, referring to the nasty surprise people receive when their fixed period expires and they're faced with higher rates.

Of course, any increase in interest rates would be good news for savers, although banks do not always pass on the full rate rise when it comes to savings accounts.

For instance, after the last increase of half a percentage point, Santander only applied that increase to its Help to Buy ISA - the rates on its other saver accounts went up by only a quarter of a percentage point.

Interest rates are decided by a team of nine economists who make up the Bank of England’s Monetary Policy Committee and meet eight times a year to look at how the economy is performing.

The BoE delayed its meeting on interest rates from 15 September to today following the death of Queen Elizabeth II.

The previous meeting in August saw rates raised by half a percentage point to 1.75% - the biggest increase in 27 years.

The last time rates were this high was during the global financial crisis in December 2008.

If the bank raises the rates by three-quarters of a percentage point today, it will be the largest increase since 1989 - barring a failed attempt to support sterling on Black Wednesday in 1992 which was later unwound.

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Good morning and welcome to our live coverage of the Bank of England’s interest rates announcement.

In August, the Bank raised rates for the sixth time in a row from 1.25% to 1.75% - the largest increase in 27 years. Today, it is widely expected to raise rates again by 0.5 percentage points or even as much as 0.75.

The move is an attempt to slow the surging cost of living, known as inflation, which is climbing at its fastest rate in nearly 40 years.

The Bank will give an update from its Monetary Policy Committee, which is in charge of making decisions about interest rates, at 12:00 BST.

Stay with us as we bring you the latest updates and what this means for you.