Cost of borrowing up with interest rate set to rise to 1.25%

At its meeting ending on June 15, 2022, the MPC voted by a majority of 6-3 to increase its Bank Rate by 0.25 percentage points, to 1.25%.

It said the minority preferred to increase the Bank Rate by 0.5 percentage points, to 1.5%.

The Bank of England said the rise is to try to curb runaway inflation.

It pointed out that the twelve-month Consumer Price Index (CPI) inflation rose from 7% in March to 9% in April. The Bank of England target for inflation is 2 per cent.

"Inflation’s overshoot of the 2% target mainly reflects previous large increases in global energy and other tradable goods prices. The former has been greatly exacerbated by the war in Ukraine, which has also raised significantly the wholesale price of many agricultural commodities.

"The latter mainly reflects the impact of the pandemic, which shifted demand towards goods but also impaired and disrupted supply chains," the BoE stated.