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The Bank of England is expected to announce the biggest rate hike in 33 years today.
Markets expect the Monetary Policy Committee (MPC) to raise rates by 0.75 percentage points to 2.5 percent.
That would be the biggest increase the UK has had since the financial crisis and the biggest single rise in interest rates since 1989.
However, economists expect lower growth to 2.25 percent when it was announced at noon. That would be the same 0.5 percentage point change as the last increase.
Economists also expect rates to rise again in November and December, reaching 3 percent by the end of the year.
The decision to raise rates is an attempt to keep inflation under control. It is the best tool the Bank of England has to steer inflation – currently 9.9 per cent – towards its 2 per cent target.
What are interest rates and why do they rise?
The interest rate is a measure that tells you how high the cost of borrowing money is, or how high the rewards of saving are.
If you borrow money, usually from a bank, the interest rate on that money is the amount you will be charged for borrowing it.
It is a fee above the total loan amount and will be shown as a percentage of the total amount.
My colleague Holly Bancroft there are more:
Everything you need to know about interest rates and how they affect you
Borrowing costs are already at their highest level in 13 years
Matt Mathers22 September 2022 08:58
Good morning and welcome to the Independent’s paper on the Bank of England’s interest rate announcement.
Analysts expect the rate to be increased by at least 0.5 percent, perhaps 0.75 percent, which would be the biggest increase in some 30 years.
The Bank’s announcement is expected around noon. We’ll bring you all the latest news and reactions as they arrive.
Matt Mathers22 September 2022 08:53