Signs the interest rate peak has been reachedpublished at 12:07 Greenwich Mean Time 23 March 2023

12:07 GMT 23 March 2023

Faisal Islam
Economics editor

Another rate rise up to 4.25%.

While that is the latest in what has been a relentless series of rises, there are signs that the peak has been reached.

The increase was smaller than recent rises, and the Bank noted that it expected inflation to fall even more sharply than last month, on the back of Budget cost-of-living measures. Those measures, including prolonging help with energy bills, will also boost the economy, and means that the Bank no longer anticipates that the UK is currently in technical recession, though the economy has been broadly flat for some months.

The Bank says that global financial fragility has increased the funding costs for banks, and that might be passed in to the economy.

A discussion over pausing rate rises seems likely in May, at the same time as the Bank’s economists release its quarterly forecast for inflation.

Tom Espiner
BBC Business reporter

The Bank has put up rates to 4.25% as it tries to get inflation under control - because that makes the cost of paying back loans and credit cards more expensive but should mean you get a better return on your savings.

Economists say that both those things mean people spend less on goods and services.

As that demand falls, the pace of price rises eases - taming inflation.

That's the theory, anyway.

But some economists have said the problem is not actually too much demand - but too little supply.

You can't meaningfully cut the amount of food people need to eat, for example - yet food prices are going through the roof.

People also need to use energy - and although wholesale energy prices are falling and the government is helping - people are still feeling the squeeze on their bills.

Interest rates have been increased to 4.25% from 4% by the UK's central bank in an attempt to slow rising prices.

The Bank of England's decision to lift rates for the 11th time in a row comes after figures showed the cost of living rising by more than expected.

Inflation jumped to 10.4% in the year to February, despite predictions it would fall.

The rate rise comes amid lingering worries over the global financial system after two US banks failed.

Any moment now we are expecting the Bank of England to make its announcement on interest rates.

Once it is announced we'll analyse what it means for you and bring you the latest reaction.

Jonathan Josephs
BBC business reporter

When the Bank of England makes its decision on the cost of borrowing it will also be considering the broader global economic outlook.

Food and energy prices are continuing to rise and have prompted central banks in Norway, the Philippines, Switzerland and Taiwan to also increase interest rates today.

Those increases are linked to the war in Ukraine, which is one of the world’s biggest food supplier.

Pressure on prices may ease thanks to the weekend’s extension of a UN deal to allow its exports to continue, but it's unclear how long that will last.

Another recurring them is that a shortage of workers means companies are having to put wages up to retain and attract staff.

That puts more money into economies and fuels inflation.

As Taiwan’s central bank said: “High interest rates could persist for an extended period.” That is likely to slow global economic growth this year.

As we've been reporting this morning, the Bank of England is due to announce its latest decision on interest rates at 12:00 GMT.

Many commentators believe the rate will rise because UK inflation jumped last month. But some think jitters about the strength of the world economy may mean there is no change.

Stay with us as we build up the announcement.

Michael Race
BBC Business Reporter, at the Bank of England

I'm here at the Bank of England in London ahead of the decision on interest rates.Soon I'll be heading down into the depths of this historic building where I'll be locked in the Bank's basement for an hour with other journalists before the latest rate and reasons behind it are released to the public at midday.

We'll have no contact with the outside world the hour we're down in the basement - we're asked to put any mobile devices into a locker to prevent any leaks of the announcement.

But come midday I'll be given access to the Bank's wi-fi and will be able to share with you the latest interest rate decision.

See you on the other side.

Slowdown in US economy would hit UKpublished at 11:33 Greenwich Mean Time 23 March 2023

11:33 GMT 23 March 2023

Faisal Islam
Economics editor

The Bank of England is grappling with balancing stubbornly high rates of inflation, global financial fragility and stagnant growth as it is expected to raise rates again today.

Last night the US Central Bank the Federal Reserve, raised its interest rates again, but clearly indicated it had held back and would hold back from further large rises because of the impact of the banking pressures in the US.

Chair Jay Powell said the failure of the Silicon Valley Bank this month had occurred after the fastest bank run in US history, and said regulators were still getting to the bottom of how it happened. He had to reassure Americans that their deposits were safe, though fell short of explicitly guaranteeing all of them.

Last night the Bank of England wrote to MPs saying that the UK arm of SVB had on March 10th in just one day lost £3bn, a third of its deposits. Regulators are pondering whether technology, social media and changes in saver behaviour are making banks inherently more fragile. It said while the UK system remained resilient there were risks of international spillovers.

A predicted slowdown in the US economy as a result of the bank fears will also affect the world including the UK.

The Bank’s rate setters face a tricky decision today, though since yesterdays shock rise in inflation, the expectation is of a further rise from 4% to 4.25%, which would be a slowdown after 5 successive half point rate rises.

Sonja Laud, chief investment officer at Legal & General Investment Management, told the BBC that the decision to raise US interest rates yesterday was a difficult balancing act between “arresting inflationary forces and slowing down the economy too much".

But she points out that in the last 70 years every rate-hiking cycle has led “either to a recession or a financial crisis - or both. So the question is: why should this time be simple?”

Citing the recent examples of Credit Suisse and Silicon Valley Bank, Laud says:

Image source, Getty Images

Just to recap - the Bank of England is due to announce its latest interest rate decision at noon, a day after official figures showed that inflation unexpectedly shot up in February to 10.4%.

That jump has prompted analysts to expect an 11th consecutive rise in rates from 4% to 4.25%.

It would mirror a hike in the US yesterday, where the Federal Reserve increased its key rate by 0.25 percentage points.

But there are fears that the move could add to financial turmoil which has led to strains in the banking system.

Two US banks - Silicon Valley Bank and Signature Bank - collapsed this month, buckling in part due to problems caused by higher interest rates.

Read more on this story here.

The UK is affected by prices rising across the globe. So there is a limit as to how effective UK interest rate rises will be.

However, other countries are taking a similar approach, and have also been raising interest rates.

The US central bank has announced big rate rises which have taken its key rate to levels not seen for nearly 15 years. Yesterday, the Fed lifted its key interest rate to 4.75%-5%, up from near zero a year ago.

As of today, interest rates are:

Australia: 3.6%

Brazil: 13.75%

Canada: 4.5%

Eurozone: 3.5%

And Argentina, which saw its inflation rate surge past 100% last week, has an interest rate of 78%.

Meanwhile, Russia, China and Turkey have seen their interest rates fall in the last year.

This will be obvious to many of you but for those who need a refresher... what exactly are interest rates and why does it matter when they go up?

They are basically the extra cash that gets charged on top of a loan. So if a friend loans you £10 at a 10% interest rate, you'll pay them back £11.

If you hear about rates going up, that means you'll pay more interest on borrowed money.

Interest rates are a big deal for anyone with a mortgage, especially those on flexible mortgages - where the interest rate charged by a bank is influenced by the Bank of England base rate.

The reason the Bank of England decides to put up interest rates is became it thinks prices are going up too quickly, which is called inflation.

It can decide to raise interest rates to discourage people from taking out loans or spending on their credit cards.

However, it is not all bad news. If you have money in savings, higher interest rates should increase the amount of interest you earn. Banks can be slow to pass on these rises, and it can be worth looking around for the best rate.

Read more about this here.

Sir Charlie Bean, formerly of the Bank of England, has given the BBC his take on any further rise in rates.

He says that while inflation is rising so is pay growth in the private sector and vacancies are also quite high.

All of this adds up to some sort of “compensation” people can get for higher inflation “but that just tends to perpetuate the inflation," he says.

However, he says that the committee has already pushed through substantial rate increases over the last year and the effect of those still has to come through - though it is “reasonable” to think the economy will slow down in the next few quarters.

As for the effects of Brexit on the labour market, Bean says that they are “subtle” – but that Brexit makes it harder for firms to pull in extra workers at short notice.

“The supply of labour is less elastic than it was when we were in the EU,” he says.

Rising interest rates help with cooling demand on the economy as a whole. They might generate “higher unemployment, lower vacancies, lower pressure for higher pays,” Bean says.

“Firms are also less inclined to push through higher prices if demand is a bit weaker.”

Every month there's a new figure for inflation - it estimates how much prices are rising across all the goods and services in the economy.

In the 12 months to February 2023 the figure was 10.4%. That means things costing £1 in February 2022 cost more than £1.10 the same time the following year.

Here are some of the biggest drivers of these overall price rises - but your own personal inflation rate depends on what you spend your money on.

Image source, .

How much are prices rising for you? Try our calculator

Image source, Reuters

As we've been explaining, the Bank of England raises interest rates in a bid to calm the rate of rising prices, known as inflation.

This figure unexpectedly went up, after falling for three months in a row.

New numbers released this week show the inflation rate jumped to 10.4% in the year to February from 10.1% in January.

Inflation is the increase in the price of something over time.

If a bottle of milk costs £1 but £1.05 a year later, then annual milk inflation is 5%.

Why are prices rising so fast?

The soaring cost of energy has been a key factor in driving inflation.

Oil and gas were in greater demand as life got back to normal after Covid.

At the same time, the war in Ukraine meant less was available from Russia, putting further pressure on prices.

The war has also reduced the amount of grain available pushing up food prices.

This effect was compounded in the UK in February by a shortage of salad and other vegetables, which took food inflation to a 45-year high.

Alcohol prices in restaurants and pubs also rose.

Higher interest rates will mean higher mortgage payments, and experts say more people are at risk of falling into debt or losing their homes.

Try our calculator here to see how your mortgage might be affected by a rate increase.

Repossessions are far rarer than they used to be, and there are lots of stages before a lender can take such action.

The whole process takes about two years.

But if you think your home is at risk, it is worth getting free, independent debt advice., external

Surprise inflation rise to inform Bank’s decisionpublished at 10:09 Greenwich Mean Time 23 March 2023

10:09 GMT 23 March 2023

Andrew Verity
Economics correspondent

Image source, PA Media

At the start of this week traders in the City and economists were convinced the Bank of England had good reason to keep interest rates on hold.

A minority on the nine-member committee were already worried that 10 rate rises in a row might pitch the economy into recession.

And the vulnerability of some parts of the financial system to sharply rising rates has been underlined by the demise of banks from SVB to Credit Suisse.

However, yesterday’s inflation figures showed that even after stripping out food and fuel, so-called‘core inflation’ was on the rise.

The Bank of England, which is not mandated to prevent recession but only to target inflation, is widely expected to raise its official rate from 4 to 4.25%.

Adding that to earlier increases, it would mean a minority of mortgage holders on variable rates paying about £251 a month more on average than they did at the end of 2021.

With interest rates expected to go up yet again, many of you will be worried about even more of a squeeze on your household budget.

Throughout the cost of living crisis, the BBC has been looking at how people up and down the UK have been finding ways to cope. We've also been providing tips from experts for navigating through what's been an extremely difficult period for many of us.

Here are some ways you can find help:

• Anyone with a mortgage can use this calculator to see what the difference in their monthly payment is likely to be under a higher interest rate (If you're on a fixed mortgage, your rate won't change until the end of your fixed period.)
• Worried about missing a repayment? There is advice here on how to engage with your lender, and what responsibilities they have
• Prices are rising - but do not affect everyone in the same way. Use this calculator to find out your own personal inflation rate
• Want some help tightening up your budget? Here is some savings advice tailored to your personal circumstances
• And here are five hacks on how to save money on the food shop

Interest rate rise expected as prices soarpublished at 10:00 Greenwich Mean Time 23 March 2023

10:00 GMT 23 March 2023

Kevin Peachey
Cost of living correspondent

The Bank of England is expected to increase interest rates for an 11th consecutive time following a surprise jump in the rate of rising prices.

Analysts think an increase in the Bank rate from 4% to 4.25% is the most likely outcome of the Monetary Policy Committee meeting at midday.

Policymakers face a balancing act between controlling inflation and ensuring financial stability.

A change would have an immediate impact on some borrowers and savers.

The cost of a variable or tracker mortgages would go up, as could the interest on other loans, but the rate of return for savers may improve.

Here’s how an interest rate rise could affect you

Image source, Getty Images

Before we get into the Bank of England's decision on interest rates let's look at why it changes them.

The key thing to understand is that raising interest rates helps to control inflation.

Inflation means the rate at which the cost of everyday products is going up.

Yesterday the latest inflation figure was released and it showed a surprise jump to 10.4% in the year to February from 10.1% in January.

Interest rates affect how much money a borrower has to pay back when returning the money in a loan. A higher interest rate makes it more expensive to borrow money.That encourages people to borrow and spend less, and save more - which in turn calms inflation.

The Bank of England is the UK’s central bank, independent of the government. It tries to maintain financial stability and sets the UK’s official interest rate. It has a target to limit inflation to 2% each year - but recently, prices have been rising at about five times that level.

The Bank has repeatedly been forced to raise interest rates recently, and looks set to carry on.But it’s a balancing act. The Bank doesn’t want to slow the economy too much with its interventions.

And in the meantime, higher interest rates mean higher repayments on things like mortgages, credit cards and car loans - increasing the financial pressure on lots of households.