THE Bank of England has raised interest rates to their highest level for 14 years, putting further pressure on mortgage holders.
Since last December, interest rates have gone from 0.1% to 3.5% as the bank tries to tackle inflation.
Most of the significant interest rate rises came after Liz Truss's disastrous mini-Budget sent the economy into turmoil.
Despite markets calming somewhat since the former PM's shambolic tenure, the economy is still feeling the consequences - those with mortgages are now facing major price hikes.
READ MORE: Douglas Ross ‘concerned’ about his mortgage – but backs Liz Truss's tax cuts
Six members of the Bank of England’s nine-strong Monetary Policy Committee voted to raise its interest base rate from 3% to 3.5%.
However, two members of the committee – Swati Dhingra and Silvana Tenreyro – voted in favour of holding rates at 3%.
Another member, Catherine Mann, called for a firmer 0.75 percentage point increase, at the meeting held on Wednesday.
Chancellor Jeremy Hunt said: “High inflation, exacerbated by Putin’s war in Ukraine, continues to plague countries across the world, eating into people’s pay cheques and driving up food and energy prices.
“I know this is tough for people right now, but it is vital that we stick to our plan, working in lockstep with the Bank of England as they take action to return inflation to target.
“The sooner we grip inflation the better. Any action which risks permanently embedding high prices into our economy will only prolong the pain for everyone, stunting any prospect of economic recovery.”
READ MORE: Why has the Bank raised interest rates, and what does it mean?
In response to the Bank of England’s decision, the Unite trade union general secretary Sharon Graham said: “The Bank of England’s leadership continues to make the wrong choices.
“First, they call on workers not to ask for pay rises. Now, they inflict yet more pain during this cost-of-living crisis while the profiteers, who are the real drivers of inflationary price rises, are let off the hook yet again.
“Millions are already struggling and by raising interest rates further the Bank of England is adding even more to that pain.
“For many this rise could be the straw that breaks the camel’s back.
“The Bank of England doesn’t have to do it and its leadership should be held responsible for the consequences.”
Meanwhile, the Scottish Greens economy spokesperson Maggie Chapman MSP branded the announcement a "bitter blow" for people across Scotland.
"A lot of people were already very scared about what is to come, and this will only compound those fears," she said.
“Things are being made much harder by a disastrous Brexit that is raising prices and costing jobs, and by the sky-high energy bills and punishing inflation that has been inflicted by failed Tory economic policies.
“All of this comes on the back of more than a decade of brutal and unnecessary austerity and benefit cuts that Scotland didn’t vote for but has had to suffer.
“It doesn’t have to be this way. With far too many people being forced to skip meals or freeze in their homes, it’s more vital than ever that we break with the failed policies of the past and do things differently."
The pound dipped after the Bank of England’s news, dropping by as much as 1% against the dollar after the announcement at noon.
It bounced back slightly but remains 0.78% lower at 1.232 against the US dollar, and 0.2% lower against the euro at 1.160.
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