Interest rates have been lifted yet again, making them the highest for more than 14 years.

Despite the risk of a recession, the Bank of England confirmed it will hike interest rates for the 10th time in a row today in a bid to tackle high inflation.

Borrowing costs are rising to 4%, from the current rate of 3.5%, putting the fear of god into homeowners already struggling with their mortgages.

It comes after six members of the Bank’s nine-strong Monetary Policy Committee (MPC) voted to raise its base rate from 3% to 3.5% in December.

Both Swati Dhingra and Silvana Tenreyro voted for no change last month, and this time it was no different.

They preferred to maintain the rate at 3.5%, which means the MPC voted by a majority of 7–2. 

‘Looking further ahead, the MPC would adjust the Bank rate as necessary to return inflation to the 2% target sustainably in the medium term, in line with its remit,’ the minutes of today’s meeting said.

Experts also believe interest rates could peak at 4.25% or even 4.5% next month, before finally coming back down.

But Bank governor Andrew Bailey provided some optimism for the future of the UK economy as he insisted the country has turned a corner on rising inflation.

He said that while the country still faces a recession, it could be ‘shallower’ than previously expected, indicating a less severe downturn.

On Tuesday, the International Monetary Fund (IMF) predicted the UK will be the only major economy to plunge into recession this year, with the economy set to contract by 0.3%.

Chancellor Jeremy Hunt acknowledged the grim forecast but insisted the long-term prospects for growth are more promising.

The Bank’s announcement comes as Shell this morning reported a record profit of £68.1 billion after soaring oil prices boosted its performance in 2022.

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