Emma Owen
Live reporter

As ever, there's plenty of detail and analysis on our website for you to read at your leisure:

Start here: Read our news story covering today's rate rise.

How it affects you: Read our guide on what it means for your money.

What does it all mean? Our economics editor Faisal Islam shares his thoughts here.

Need help? We have a guide to some practical things you can do if you're struggling.

Thanks for joining us, and have a good evening.

Image source, PA Media

And with that last post on Andrew Bailey, we're going to wrap up our coverage of today's interest rate rise.

If you'd like a quick catch up on today's events, here are the key things to know:

• The Bank of England increased its base interest rate to 5.25% from 5%, meaning the cost of borrowing for mortgages, credit cards and other loans is at its highest level since 2008
• Projecting the short-term future of the economy, the UK's central bank said it expects inflation to fall below 5% in the autumn or winter
• It signalled for the first time that it would keep interest rates higher and that they would remain higher until UK inflation is brought under control
• Governor Andrew Bailey said the rate of annual price rises must be brought back to its 2% target, as "inflation hits the least well-off hardest"
• The Bank also predicted the UK will not enter a recession - where the overall economy shrinks - but it expects growth to be limited and unemployment to rise

• Chancellor Jeremy Hunt acknowledged the rise will be difficult for many people, but says the government plan for lowering inflation is working and it is sticking to it
• His Labour party counterpart, Rachael Reeves, says the government is saddling people with higher mortgages, food bills and taxes

Andrew Bailey has been giving another round of media interviews.

And he's told our economics editor Faisal Islam that the Bank of England interest rate won't come down until there is more solid evidence that inflation is falling.

The Bank's governor emphasised there were multiple routes to get the UK's annual rate of price rises back to its target of 2%.

And asked about the prospects for economic growth, Bailey said the Bank had forecast the UK would avoid a recession - where the overall size of the economy shrinks - because of falling energy prices.

• If you miss two or more months' repayments you are officially in arrears
• Your lender must then treat you fairly by considering any requests about changing how you pay, such as lower repayments for a short time
• They might also allow you to extend the term of the mortgage or let you pay just the interest for a certain period
• However, any arrangement will be reflected on your credit file, which could affect your ability to borrow money in the future
• Read more here.

When will interest rates peak - and start falling?published at 16:37 British Summer Time 3 August 2023

16:37 BST 3 August 2023

Michael Race
Business reporter

The financial markets are now predicting rates will peak at about 5.7% in early 2024 - that's down slightly on the expected peak of 5.8% prior to today's decision.

Now, although interest rates may peak at a lower level, the Bank has said they will stay at a higher level for longer - but they've not said how long.

According to economists at Capital Economics, since the Bank became independent from government in 1997, the average gap between the last interest rate hike and first cut has been 10 months.

Paul Dales, its chief UK economist, thinks it may be longer - about 12 months before rates start to come down.

If you're worried about your mortgage rate going up, then there are things you can do. Watch the BBC business reporter Lora Jones tell you, in a minute.

Video by Sam Everett and the Video Formats team

We've just heard from Chancellor Jeremy Hunt, who's acknowledged that a rise in interest rates will be "a worry for families with mortgages and for businesses with loans".

But speaking to broadcasters a little while ago, the chancellor points to the Bank of England’s forecast that this time next year inflation will be at 2.8% and a recession will have been avoided.

He added that the forecast is vindication of the government’s plan to cut inflation.

He said the government must stick to that plan and not "veer around like a shopping trolley... so that families and businesses can start to feel the benefits of that plan working".

Is Sunak on track to meet his five pledges?published at 15:41 British Summer Time 3 August 2023

15:41 BST 3 August 2023

Image source, PA Media

Back in January, Prime Minister Rishi Sunak set out his five priorities for 2023.

"I fully expect you to hold my government and I to account on delivering those goals," he said at the time.

The top priority is to halve inflation, which needs to be 5.3% or lower in the last three months of 2023 if the PM is to succeed.

So there was some good news for him this morning, when the Bank of England predicted that inflation will be about 5% by the end of the year.

However, there was a more mixed picture on another key goal - to "grow the economy".

The Bank says it only expects economic growth of 0.5% in 2023 and 2024. That’s partly because of the battle to bring down inflation.

Read more on the five priorities here.

Peter Ruddick
Business reporter

Higher interest rates are designed to curb spending and bring down inflation. But what if you run a business reliant on consumer spending?

Peterborough hair salon owner Jo Bevilacqua told me she understands the economics but that it is a “hard pill to swallow”.

“We are still in pandemic recovery mode. We don’t want people to be spending less. Our livelihoods are in their hands. If they are not spending money then we can’t keep our doors open, pay our staff or pay our suppliers”, she says.

Jo isn’t immune from the rates pain either. She moved onto an interest only mortgage when her business was struggling. “I need to be in a position where everything calms down to be able to re-mortgage. It comes to me as a three-pronged attack. My own mortgage payments are going up, but there are also my staff and customers.”

When will interest rates fall?published at 15:25 British Summer Time 3 August 2023

15:25 BST 3 August 2023

Faisal Islam
Economics editor

Don't expect rates to fall any time soon, but they may not go up much more from here. That is what is indicated by the Bank of England's important new language today.

The words are as important as its deed - raising rates for a 14th consecutive time.

The Bank had picked up that some households and some in the financial markets were assuming that once inflation had tumbled to more normal levels, that interest rates too would fall.

By stating that it will "ensure that Bank rate is sufficiently restrictive for sufficiently long", the Bank's Monetary Policy Committee is clearly indicating that rates could plateau above 5% across next year into 2025.

However, it is also implicitly acknowledging that, at 5.25%, rates are now close to their peak in this cycle of 14 rises.

Read more of Faisal's analysis here.

Peter Ruddick
Business reporter

Every time interest rates go up so do Nicola Valentine’s stress levels.

After years of renting, she secured a mortgage on her Cambridgeshire home in November 2021. That means she’s one of the 800,000 people with fixed deals coming to an end this year.

“My mortgage is basically going to go up by £300 or £400 a month,” she told me. “I don’t have it. I feel a bit paralysed about what to do.”

Nicola says she thought her house sharing days were over but now it looks like she is going to have to take on a lodger.

“It took me years to get on the property ladder. This wasn’t the dream; this wasn’t the plan. I feel frustrated that, as a young professional, I should be able to afford a place and then be able to live in it.”

Image source, Getty Images

What part do politicians have to play in all this?

It's mainly the Bank of England's job to get inflation down, says Paul Johnson, director of the politically independent economics think tank Institute for Fiscal Studies.

But he says politicians can make it worse and they must think about how to boost the economy in the future.

He tells BBC Radio 4's World at One that neither Labour or the Tories have produced detailed plans about what they would do after the next election, but both will face spending restraints.

Both are struggling to lay out "clearly and honestly" how they will tackle big problems facing the country, he says, such as how to overhaul planning in order to boost house-building and develop green infrastructure.

Dave from Chester-Le-Street in Durham is on a variable rate mortgage and says he's having to forgo essential maintenance work on his home "as a result of paying so much money onto my mortgage".

"I was coming away with a good £400/500 at the end of every month after all my bills were paid. Now, I’m lucky if I have about £100 left over to pay for things like food and fuel for the entire month," he tells Radio 5 Live.

Dave says he's taken on a second job to help cover the bills.

“I’ve barely got any time for myself. It’s crazy at the minute,” he says.

If you've got a mortgage, we've answered some of your common questions here.

Meleisha in Chesterfield is another Radio 5 Live listener. She was on a variable rate mortgage, but moved to a fixed-term mortgage two months ago at 4.7%, as she believes “rates aren't going down anytime soon”.

“What people are forgetting is the rates we’ve had for the past 15 years, they weren’t the normal rate… people got into a false sense of security about what they were taking on, and weren’t looking far enough ahead,” she added.

Meleisha says food prices and children’s consumables are expensive and that’s "because a lot of it isn’t manufactured in this country - it’s a big problem”.

“If you look at America, they do have a lot of manufacturing going on there, we don't have an awful lot here to sustain ourselves as a country.”

Rents are rising at the fastest rate in eight years, and renters are feeling the knock-on effects of higher mortgages too.

Radio 5 Live has been hearing from listeners today, and Sophie in Ipswich says her rent is “just about affordable” but she relies on Universal Credit outside of what she earns to “survive each month”.

She says she knows nothing about her landlord, and today's rise in interest rates means “a very uncertain time” as she waits to learn if they will raise the rent.

“The only other alternative I have would be saying to the landlord, ‘look, I can’t afford this’, and basically waiting for him to give a section 21 [eviction notice]," she says.

Find out more about your renting rights - including how often your rent can be put up - here.

Esyllt Carr
Business reporter

Steve Woodford, who runs Haslams Estate Agents in Reading, says he hasn't seen the shock to the housing market that some predicted from higher interest rates.

“I think we’ve expected the last two rate rises to have an impact, and they haven’t yet,” he says. Remember, higher rates make mortgages more expensive, and therefore could make the housing market less competitive.

“The prices might have dropped back by 5 to 10% but, put that in the context of what we’ve seen post Covid - a 25% increase - it’s not a crash,” he says.

However, he says there’s been a much clearer spike in the cost of renting, with rents up around 20% in the last two years.

He puts that down to a shortage of rental properties – but says despite reports, he’s not seen a big surge in landlords selling up.

Interest rates have been increasing across the world in recent months.

The Bank of England's latest rate hike means the UK now has the highest rates in the G7 - a group of the world's seven largest so-called "advanced" economies.

That's higher than Canada, France, Germany, Italy, Japan, the US.

Take a look at how the UK compares in this graph:

We carried reaction from Labour's shadow chancellor Rachel Reeves earlier. She says the government needs to take responsibility for the high inflation that has led to the rate rise today.

You can take a look at her comment in this 20-second clip:

Michael Race
Business reporter

Kara Gammell, personal finance expert at MoneySuperMarket, says the latest rate rise will feel like more bad news, but urges people to not "let this make you feel despondent".

"Bear in mind that the most competitive offers don't tend to last long, particularly if they’re popular. It’ll pay to do your sums carefully and look around for the best deal for your circumstances," she says.

Laura Suter, head of personal finance at AJ Bell, says "it might feel like madness" to say that interest rates have peaked, but argues this could be the peak for consumers - she says banks and building societies have started cutting both savings and mortgage rates.

Skipton Building Society has announced it will not change its variable rate mortgages following the Bank's decision.

Meanwhile, Matt Thompson, head of sales at estate agents Chestertons, says they expect the rate rise will force house hunters to be more cautious, review their financial situation and calculate "a more conservative budget".

But while fewer first-time buyers have entered the housing market, he is confident that things will pick up again "once buyers have adjusted their criteria and lenders are bringing more products to the market again".

Image source, EPA-EFE/REX/Shutterstock

We're leaving that press conference now. Safe to say it's been a busy few hours, during which the Bank of England (BoE) has increased the UK's interest rate - or base rate - for a 14th consecutive time.

• The UK's interest rate has risen by 0.25% - from 5% to 5.25% - the highest rate since April 2008
• The BoE also released its quarterly Monetary Policy Report, which warned that food inflation remained "extremely high" but could fall to around 10% (from the current 17.3%) by the end of the year
• It also predicted that inflation would drop below 5% by then - meaning Prime Minister Rishi Sunak would meet his much-publicised target of halving inflation by the end of the year
• In a press conference, BoE governor Andrew bailey said the path of UK inflation will depend largely on the jobs market and on pay

• Chancellor Jeremy Hunt says inflation is expected to be below 3% in a year's time - but acknowledges that families will struggle with issues such as higher mortgage bills in the meantime
• Labour and the Lib Dems say the interest rate rise will affect those on lower incomes - blaming the government for the "crisis"