The Bank of England (BoE) has announced an increase in interest rates by 0.50%, taking the rate from 4.5% to 5%.

This hike took the base rate to its highest level since the financial crash of 2008.

The decision, made by the BoE’s Monetary Policy Committee (MPC) in a majority vote of 7-2, reflected its ongoing efforts to curb stubbornly high inflation.

Two members preferred to maintain the bank rate at 4.5%.

It marked the 13th consecutive increase since December 2021, demonstrating the central bank’s aggressive stance in curbing soaring inflation, which peaked at a 40-year high of 11.1% in October last year.

According to figures released yesterday by the Office for National Statistics (ONS), inflation remained at 8.7% for the month of May – unchanged from April.

While inflation may be on a slow decline, it is still far from the central bank’s target of 2%, with post-Covid recovery in the UK lagging significantly behind the US and Europe.

Mark Bogard, CEO the Family Building Society, said: “Politicians and economists often say we shouldn’t take one month’s figures in isolation…be brave and do nothing.

“The interest rate rises we have already had have not yet worked through.

“Too slow, then too quick and then too high is not a good way to act. It’s bonkers.”

Kieran Jones, head of policy and communications at the National Association of Commercial Finance Brokers (NACFB), said: “Before yesterday’s inflation numbers, a 25 basis point rise to 4.75% was looking likely.

“However, mounting evidence illustrating that underlying inflationary pressures are withstanding prior rate increases is raising the chance of a bigger, 50 basis point increase.

“The NACFB will be closely monitoring the impact such a significant rise will have on both lending and borrowing appetites.”