Commenting on the increase on today’s Bank of England rate, Nitesh Patel, Strategic Economist at Yorkshire Building Society, said:

The latest rate rise of 0.50% was totally expected by most analysts with inflation edging further upwards. This is the seventh consecutive rate hike since last December as the Bank strives to bring inflation under control. Higher rates typically take 18 months to impact households and businesses, so some of the earlier increases may not have any impact on bringing inflation down until next year. An important point here is that 80% of the outstanding mortgage stock is on a fixed rate and the five-year fixed rate deals taken out in the bumper year of 2018 will come up for renewal in 2023, which is close to two million households. So, from next year many households will be faced with higher monthly payments.

The outlook for further hikes depends on where inflation peaks. The energy price guarantee is expected to keep inflation around 4 per cent lower than it would have been without the scheme. However, the scheme will provide a large boost to the economy and likely to be inflationary, so further rates rises can be expected.