It announced it would raise the rate from 4.5% to 5% on Thursday its latest bid to tame inflation – higher than analysts’ predictions of 4.75%, and the sharpest increase since February.
It is the 13th rise in a row, and comes as the government rules out helping homeowners struggling with soaring mortgage repayment rates.
Chancellor Jeremy Hunt responded to the latest rates increase, saying the government had a “watertight” resolve to bring inflation down and “if we don’t act now, it will be worse later”.
He said: “The lesson from other countries is that if you stick to your guns, you bring inflation down.
“Our resolve to do this is watertight because it is the only long-term way to relieve pressure on families with mortgages. If we don’t act now, it will be worse later.”
Bank hikes interest rates again – and there may be more to come
Why these are terrible inflation figures
In the wake of the latest hike, Prime Minister Rishi Sunak told the Times CEO summit “the reason interest rates are going up is because inflation is too high” and that the government will “remain steadfast in its course” to curb inflation.
The Bank is tasked with keeping inflation as close to 2% as it can, and has been responding by raising the base interest rate.
The move is set to deepen the mortgage crisis as borrowing costs are hiked up for the 13th time in a row.
Bank of England governor Andrew Bailey said: “The economy is doing better than expected, but inflation is still too high and we’ve got to deal with it.
“We know this is hard – many people with mortgages or loans will be understandably worried about what this means for them.
“But if we don’t raise rates now, it could be worse later.”