Interest rates hit 5.0 per cent

Posted: 09 Nov 2006 12:59:18 GMT

Interest rates have been raised to five per cent the Bank of England's monetary policy committee (MPC) has announced, their highest rate in more than five years

Interest rates have been raised to five per cent the Bank of England's monetary policy committee (MPC) has announced, their highest rate in more than five years.

The MPC voted to increase the base rate of borrowing in order to curb inflation as house prices, utility bills, wages and a strong economy all added to inflationary pressure.

"Consumer price index (CPI) inflation was 2.4 per cent in September," the MPC said in a statement.

"It is likely that inflation will rise further above the target in the near term, but then fall back as energy and import price inflation abate.

"Against that background, the committee judged that an increase in Bank rate of 0.25 percentage points to 5.0 per cent was necessary to bring CPI inflation back to the target in the medium term."

The rise will add £21.71 to the monthly payments of a homeowner with a £150,000, 25-year mortgage or £31.25 to the payments on an interest-only mortgage, said Moneyfacts.

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