Interest rates have increased for the third time in four months as the Bank of England tries to calm the rise in the cost of living.

Interest rates have risen for the third time in four months as the Bank of England tries to calm the rise in the cost of living. The rise from 0.5% to 0.75% means rates are now at their highest level since the start of the Covid blockade in March 2020. Energy bills and food costs are rising and there are fears that the war in Ukraine does not drive up prices further. why he had revoked his predictions, he said Russia's invasion of Ukraine "resulted in further sharp increases in energy and other commodity prices, including food prices". It is also likely to exacerbate global supply chain disruptions and significantly increase uncertainty around the economic outlook,” he added.The Office for National Statistics (ONS) said  energy and fuel prices have contributed to the rising cost of living. How could rising interest rates affect you? How much could interest rates rise in the UK? Banking policymakers cited  rising costs of living and high employment as  reasons for the latest rate hike. 

The members of the Monetary Policy Committee (MPC) considered that "given the current rigidity of the labor market, the continuing signs of strong internal pressures on costs and prices and the risk that such pressures will persist", an increase interest rates was justified. He also warned that inflation could hit double digits later in the year if energy prices drive the energy price ceiling higher. Interest rate hike chart The MPC voted by a majority of 81 in favor of the move, with  Bank Deputy Governor Jon Cunliffe the only member to vote to keep rates unchanged. He said this is due to the impact of rapid price increases on household incomes. The committee said further interest rate hikes “may be appropriate in the coming months, but there were risks on both sides of that judgment depending on how the medium-term outlook evolves.The invasion of Ukraine  likely pushed prices higher even faster than the Bank had expected at its last meeting in February, he added. “The economy has been subjected to a series of very significant shocks recently,” he wrote. Morag Milligan Image caption Morag Milligan is  operations manager at Milligan's Coaches Morag Milligan,  operations manager at Milligan's Coaches in East Ayrshire, said  the business had just recovered from the shock of  lockdowns and travel restrictions travel related to the coronavirus. Citing rising fuel prices, he said: "It seems like it never ends for the industry...it's one crisis after another. The business has seen an 8% increase in fuel costs , which has strained resources."The increase  makes it harder and harder to manage," he said. According to UK Finance, around two million households will see an immediate increase in  mortgage payments following the rate hike. The increase will add around £26 per month to the cost of a typical trailing mortgage and £16 to the cost of a typical standard variable rate mortgage. its last pricing meeting. 

However, he expects inflation to "fall significantly" once prices stop rising and the impact of inflation on household incomes begins to be felt. While the main impact of a rate hike will be felt by owners of variable rate mortgages, the big change today was in the musical mood of the Bank of England. Last month it indicated that the increase was the first of a series likely in the coming months.This language was toned down and  there was indeed a committee member  who voted to keep them on hold. This indicates that the Bank is concerned about the economic impact of the massive increase in energy and food prices. More nervous than me is  the fact that inflation's already staggering 30-year highs will not only be even higher at 8%, but potentially surpass them by the end of the year. The Russian invasion is just one of a series of so-called “stagflationary” shocks, which are sending growth  and inflation data in the wrong direction. There is little the Bank can do to stop the capping of energy  and food prices by reducing the increase in the cost of living to 9 or 10%. But he signals concern about the overall impact on the economy of a prolonged hit to consumers, from events 1,500 miles away.