Summary

  • The Bank of England has increased the base rate to 5% - up from 4.5%

  • It's a bigger increase than most forecasters expected

  • The last time the base rate was 5% or higher was in 2008

  • Higher interest rates are intended to lower inflation, by giving mortgage-holders less to spend

  • The government's target is to have inflation down to 5% by the end of the year

  • Rishi Sunak says: "I always said this would be hard - and clearly it's got harder over the past few months"

  • But he adds: "I am totally, 100%, on it, and it's going to be OK"

  • Seven of the nine members of the bank's committee voted for the 5% rate - two wanted no change at all

Live Reporting

Edited by Heather Sharp

  1. Why does the Bank of England increase interest rates?

    Michael Race
    BBC Business Reporter

    The Bank has a target to keep inflation - the official measure of how quickly prices are rising - at 2%.

    Yesterday, figures revealed inflation is at 8.7% and the rate isn’t falling as fast as hoped.

    The economic theory behind increasing interest rates is that in making it more expensive for people to borrow money, they will then have less excess cash to spend, meaning households will buy fewer things and then price rises will ease.

    But it’s a balancing act. Raising rates too aggressively could cause a recession, but not raising them at all could lead to inflation going up even more.

    Not all economists even agree that the Bank should raise interest rates today.

    You can read more on the Bank of England's role here.

  2. What are interest rates?

    Michael Race
    BBC Business Reporter

    Interest is what you pay for borrowing money and what banks pay you for saving money with them.

    It is shown as a percentage of the amount you borrow or save over a year. For example, if you had £100 in a savings account with a 4% interest rate, you’d have £104 a year later.

    The Bank of England is the UK’s central bank, independent of the government, and it sets a "base rate", which influences the rates charged by lenders on things like mortgages, credit cards and loans.

    Read more: How an interest rate rise affects you and your money

  3. Your Questions Answered

    YQA graphic.

    Our cost of living correspondent Kevin Peachey is going to be on hand after the rates announcement to answer any questions you may have.

    You can get in touch in the following ways:

    In some cases a selection of your comments and questions will be published, displaying your name and location as you provide it unless you state otherwise. Your contact details will never be published.

  4. What can we expect today?

    At noon, we’ll get the announcement from the Bank on its interest rate decision.

    Our colleagues Daniel Thomas and Faisal Islam are at what’s called a lock-in at the Bank of England - where they get a bit of time to pore over the Bank’s report before it’s released.

    We’ll bring you all the key detail from them as soon as we can and then we’ll have analysis from our economics and cost of living correspondents on what it means for you.

  5. Another rate rise is on the cards

    Good morning, and welcome to our live coverage as we wait for the Bank of England’s latest decision on interest rates at midday.

    The UK’s official interest rate - called the base rate - is already at a 14-year high of 4.5% as the Bank tries to bring the rising cost-of-living under control.

    But yesterday a grim picture got ever grimmer. Inflation - the rate at which prices are rising - was expected to have dropped in May, but it didn’t, according to the latest official figures.

    A base rate rise to 4.75% was already widely expected - now some say we might see a jump to 5%.

    Either way, monthly payments on some mortgages, loans and credit cards will go up further - and we’re hearing more and more from people who are feeling the impact.

    Stay with us as we explain what’s happening, why and what it means.