Summary

  • The Bank of England has increased its interest rate to 5.25%, from 5% - the last time rates were this high was April 2008

  • Chancellor Jeremy Hunt acknowledges the rise will be difficult for many, but says the government is sticking to its plan for lowering inflation

  • The Bank says it expects inflation to fall below 5% in the final quarter of 2023

  • The government has pledged that inflation will be 5% or below by the end of the year - but the overall target remains 2%

  • The Bank's base rate influences the cost of borrowing - meaning an increase can lead to more expensive mortgages

  • But it can be good news for savers, as banks may offer greater returns on savings accounts

  • You can watch our coverage by pressing play at the top of this page

Live Reporting

Edited by Emma Owen and Dulcie Lee

  1. Here's what you need to know from today

    Bank of EnglandPA 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

  2. What happens if I miss a mortgage payment?

    • 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.

  3. UK has highest interest rate in the G7

    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:

    A chart showing interest rate comparisons. The UK is top on 5.25%, with the US close behind, and Canada on 5%. The Euro area is lower, just over 4%

  4. Watch: UK inflation much higher than elsewhere - Labour

    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: