After statistics showed that inflation remained persistently high, interest rates are predicted to increase once more.
The rate of inflation, which gauges how quickly prices grow, remained the same as in April at 8.7% for the year ending in May.
The surprise amount was caused by increased airline and used vehicle prices, although the cost of food and electricity is already severely impacting household finances.
On Thursday, interest rates are anticipated to rise by 0.25% to 4.75%, but some analysts believe they may now reach 5%.
The Bank is responsible for managing inflation at 2%, but it is currently four times higher.
Since the end of 2021, the Bank of England has been gradually raising interest rates. Since borrowing money becomes more expensive as a result, people should ideally borrow less and spend less, which should slow the rate of price increases.
This has caused worries about loans, especially mortgages, as a third of UK individuals who own a property may see significant hikes in repayment when fixed-term agreements expire. As credit requirements tighten, first-time buyers run the danger of being priced out of the market.
On Wednesday, the average rate for a two-year fixed mortgage was 6.15%, while the rate for a five-year mortgage was 5.79%.
Chancellor Jeremy Hunt said on Thursday that more interest rate increases were in order, stating that the government will “not waver in our resolve to support the Bank of England as it seeks to squeeze inflation out of our economy.”
The Conservative administration, according to Labour’s shadow chancellor Rachel Reeves, failed to “get a grip” on inflation.
