UK interest rates rise to 5.5%

The Bank of England’s Monetary Policy Committee has increased interest rates to 5.5%, the highest level since 2001.

The quarter point rise was widely expected by economists and analysts. The Bank of England is attempting to rein in inflation and cool consumer spending and house price growth.

The British Chamber of Commerce accepted the interest rate rise was necessary, but warned against future increases, which could slow UK growth too much.

A statement from the BCC said: "The Monetary Policy Committee has to be firm. But it is important not to overreact to transitory developments. There is a danger that concern over recent events would generate pressures of the MPC to go over the top."

The interest rate rise will be welcomed by savers. However, it will add an average of £16 a month onto a £100,000 mortgage.

Some economists expect interest rates will be increased again later in the year. The Bank of England is due to release its quarterly inflation report next week, which may give some clues concerning future decisions by the MPC.

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