The Bank of England (BoE) has confirmed a rise to the rate of interest, bringing the figure to its highest level since 2009.
The decision has be made following a Monetary Policy Committee (MPC) meeting to raise the rate from one percent to 1.25 percent.
The MPC of nine members voted six to three to increase rates to 1.25 percent.
The Bank of England
Yui Mok
The central bank said governor Andrew Bailey, Ben Broadbent, Jon Cunliffe, Huw Pill, Dave Ramsden and Silvana Tenreyro backed a quarter point rise.
But that three members, Jonathan Haskel, Catherine Mann and Michael Saunders, voted for a larger increase, to 1.5 percent.
In minutes of the latest decision, the Bank said Consumer Prices Index (CPI) inflation is now expected to peak above 11 percent in October.
The Bank said: “CPI inflation is expected to be over 9 percent during the next few months and to rise to slightly above 11 percent in October.
The BoE has confirmed an interest rate rise to 1.25 percent
Dominic Lipinski
“The increase in October reflects higher projected household energy prices following a prospective additional large increase in the Ofgem price cap.
“In the MPC’s latest forecasts in May, upward pressure on CPI inflation was expected to dissipate over time.
“In the main, this reflected the stabilisation of the prices of commodities, albeit at elevated levels, and other tradable goods.
“It also reflected the combined impact of weaker real incomes and tighter monetary policy on domestic demand. Monetary policy is also acting to ensure that longer-term inflation expectations are anchored at the 2 percent target.”
