The Bank of England heaped further pressure on mortgage holders on Thursday as it hiked interest rates again in yet another bid to get inflation under control.
The Bank warned of “crystallising” risks which were pushing inflation upwards as it decided to increase its base rate to 5.25% from 5%. It is the 14th rate increase in a row.
But in a good sign for the Prime Minister, the Bank said it expects the Government to meet its promise to halve inflation by the end of the year.
The Consumer Prices Index will probably fall below 5% in the final quarter of 2023, it said.
Bank Governor Andrew Bailey said: “Inflation is falling and that’s good news.
“We know that inflation hits the least well off the hardest and we need to make absolutely sure that it falls all the way back to the 2% target.
“That’s why we’ve raised rates to 5.25% today.”
However, in an unusual three-way disagreement, two members of the Bank’s decision-making Monetary Policy Committee (MPC) voted to hike the rate further, while one wanted to keep it unchanged.