Bank of England expected to raise interest rates for 11th time in 18 months

23 March 2023, 06:54 | Updated: 23 March 2023, 08:13

By Kieran Kelly

@kellyjourno

The Bank of England is expected to raise interest rates for the 11th time in less than 18 months after an unexpected rise in inflation.

The Bank is set to announce its decision on interest rates at midday on Thursday, with financial markets expecting a 0.25 per cent increase to 4.25 per cent.

A move to increase interest rates once again would be an attempt by the Bank of England to reduce inflation, though could have an adverse effect on mortgage holders.

Bank of England governor Andrew Bailey previously told the Treasury Committee he expects inflation to fall quickly in 2023, following record-high inflation in 2022.

Inflation had been dropping in the UK, but rose from 10.1 per cent to 10.4 per cent in February, the Office for National Statistics revealed on Wednesday.

It remains down from a 41-year high of 11.1% in October, but left many surprised.

Reacting to the increase, Chancellor Jeremy Hunt said "falling inflation isn't inevitable" and that the government would stick to its plan of halving inflation this year.

Read More: Inflation unexpectedly leaps to 10.4% after food prices rise to highest level in 45 years

Read More: Hunt running a ‘high-tax, high-spend, low-growth, quasi-socialist economy’ – MP

"We recognise just how tough things are for families across the country, so as we work towards getting inflation under control we will help families with cost-of-living support worth £3,300 on average per household this year," Mr Hunt said.

But Labour's shadow chancellor Rachel Reeves blamed the Government for the rise in prices, saying "nothing is working better than it did 13 years ago.

Ms Reeves said: "The reality is that under this Tory Government, families are feeling worse off and nothing is working better than it did 13 years ago.