The Bank of England's decision to hike interest rates once more will mean further financial woes for millions of homeowners, renters and businesses, as ITV News Consumer Editor Chris Choi and Economics Editor Joel Hills report
The rate has increased from 4.25% to 4.5% as the Bank of England made its 12th successive raise in a row.
Seven members of the Bank of England's Monetary Policy Committee (MPC) voted for the hike while two opposed it.
Those in favour said there had been "repeated surprises about the resilience of demand" and that inflation had been stronger than expected as the price of food and other goods were higher.
The remaining two members of the MPC wanted to keep rates unchanged, saying that inflation was already expected to fall considerably this year without the need to rise the rate again.
It had been hoped the previous interest rate at the end of March would be the last for a while, before they begin to fall again.
Bank of England governor Andrew Bailey delivers the news of rising interest rates
At the last rise, the Bank's governor, Andrew Bailey said he would only move to increase rates again "if there were evidence" of more inflationary pressures and with a hint of optimism, said private wage growth was beginning to "even off", which was "obviously a good sign in terms of inflationary pressure".But it appears the Bank is concerned about inflation rising further than the 13.5% at which it stood in March.
Retail Price Index inflation has been fluctuating at an extremely high level for many months, well beyond the Bank of England’s 2% target, but there had been hopes it was falling.
The Bank's aim by increasing rates is to make borrowing money more expensive and encourage people to spend less in the hope of curbing inflation.
But it means many homeowners could face much more expensive mortgage repayment bills, and could also influence the amount charged on credit cards and loans.
The worry for many mortgage customers is that most of the impact on mortgages still has not been felt.
With 1.3m fixed mortgages due to end this year - the Bank estimates only about a third of the impact has been felt by home owners.
And Food prices have stayed higher for longer than expected, the Bank said, partly due to Russia's war in Ukraine and poor harvests in some European countries, ramping up the cost of living for households across the UK.
It means Consumer Prices Index (CPI) inflation is expected to decline less rapidly than the Bank predicted in its last report in February.
Chancellor Jeremy Hunt responded to the Bank of England's "disappointing" decision.
He said: “Although it is good news that the Bank of England is no longer forecasting recession, today’s interest rate rise will obviously be very disappointing for families with mortgages."
'It's so important... that we stick to our plan to halve inflation'
He added: "But unless we tackle rising prices, the cost of living crisis will only carry on - which is why we need to be resolute in sticking to our plan to halve inflation by the end of the year."
ITV News' Consumer Editor Chris Choi said the 12th consecutive increase marks the longest run of rate rises in MPC history.
The Bank, which has made the biggest upward revision for growth in its history, expects the Prime Minister to meet his pledge of halving inflation by the end of the year.
"The worrying news for many mortgage customers is that most of the mortgage impact of rate rises on consumers still has not been felt - with 1.3 million fixed mortgages due to end this year - the Bank estimates only about a third of the impact has been felt," Choi added.
Inflation is still expected to drop sharply from April this year, as energy prices decline and household bills are subsidised, the MPC said.
"There remain considerable uncertainties around the pace at which CPI inflation will return sustainably to the 2% target," it added.
The Bank of England now expects the prime minister to meet his pledge of halving inflation from 10.7% by the end of the year.
The Monetary Policy Committee said a banking crisis in the US would reduce US GDP by around 0.25 percentage points, but will have a much smaller impact in Europe.
It added: "The committee judges that growth over much of the forecast period will be materially stronger than in the February report.
"This reflects stronger global growth, lower energy prices, the fiscal support in the spring Budget and the possibility of lower precautionary saving by households than previously thought."
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