The Bank of England (BOE) has increased interest rates by 50 basis points, to five percent on Thursday, the bank’s 13th rate hike, and the highest since 2008.
“The economy is doing better than expected but inflation is still too high and we’ve got to deal with it,” said Andrew Bailey, BOE’s Governor.
BOE is committed to return inflation rates down to two percent, and will take any necessary action to achieve this target, Bailey added.
Financial experts are predicting another interest rate hike by the end of this year, bringing rates to six percent, a two-decade record high.
The interest rates hike would cause the increase of monthly mortgage bills, affecting two million UK mortgage holders.
The BOE’s decision comes as a way to combat the skyrocketing inflation rates, which increased by 8.7 percent in May, opposing previous forecasts, and the Prime Minister Rishi Sunak’s promise to bring down inflation by five percent.
