By Kevin Peachey<\/strong> Interest rates have been raised for the sixth time in a row from 1.25% to 1.75%.<\/b><\/p>\n<\/div>\n<\/div>\n The Bank of England’s decision to increase rates by half a percentage point makes it the largest increase for 27 years. <\/p>\n<\/div>\n<\/div>\n The move is an attempt to slow the rate at which prices are rising. The Bank has warned that inflation could pass 13% later this year.<\/p>\n<\/div>\n<\/div>\n The last time interest rates were this high was during the global financial crisis in December 2008.<\/p>\n<\/div>\n<\/div>\n Prices are going up quickly worldwide, as Covid restrictions have been eased and consumers spend more. <\/p>\n<\/div>\n<\/div>\n Many firms have problems getting enough goods to sell. And with more buyers chasing too few goods, prices have risen. <\/p>\n<\/div>\n<\/div>\n There has also been a very sharp rise in oil and gas costs – a problem made worse by Russia’s invasion of Ukraine. <\/p>\n<\/div>\n<\/div>\n One way to try to control rising prices – or inflation – is to raise interest rates. <\/p>\n<\/div>\n<\/div>\n This increases the cost of borrowing and encourages people to borrow and spend less. It also encourages people to save more.<\/p>\n<\/div>\n<\/div>\n However, it is a tough balancing act as the Bank does not want to slow the economy too much.<\/p>\n<\/div>\n<\/div>\n Since the global financial crisis of 2008, UK interest rates have been at historically low levels. Last year, they were as low as 0.1%.<\/p>\n<\/div>\n<\/div>\n Many analysts have predicted UK interest rates will rise this month, but further increases are also expected later in the year.<\/p>\n<\/div>\n<\/div>\n Analysts at Capital Economics think the Bank will ultimately have to lift rates to 3% to quash inflation, but other economists think they won’t have to go so high. Pantheon Macroeconomics reckon interest rates will peak at 1.75%.<\/p>\n<\/div>\n<\/div>\n This can happen when people think price rises will continue – businesses raise prices to keep making a profit and workers demand wage increases to keep up.<\/p>\n<\/div>\n<\/div>\n If this happens UK interest rates could hit 3.5%, the OBR said.<\/p>\n<\/div>\n<\/div>\n Just under a third of households have a mortgage, according to the English Housing Survey, which is geographically limited but one of the most comprehensive guides available.<\/p>\n<\/div>\n<\/div>\n Of those, three-quarters have a fixed mortgage, so will not be immediately affected. The rest – about two million people – will see their monthly repayments rise.<\/p>\n<\/div>\n<\/div>\n Now rates have gone up to 1.75%, those on a typical tracker mortgage will have to pay about \u00a352 more a month. Those on standard variable rate mortgages will see a \u00a359 increase.<\/p>\n<\/div>\n<\/div>\n This comes on top of increases following other recent rate rises.<\/p>\n<\/div>\n<\/div>\n Compared with pre-December 2021, tracker mortgage customers could be paying about \u00a3167 more a month, and variable mortgage holders about \u00a3132 more.<\/p>\n<\/div>\n<\/div>\n Even if you don’t have a mortgage, changes in interest rates could still affect you.<\/p>\n<\/div>\n<\/div>\n Bank of England interest rates also influence the interest charged on things like credit cards, bank loans and car loans. <\/p>\n<\/div>\n<\/div>\n The Bank’s decisions also affect the interest rates people earn on their savings. <\/p>\n<\/div>\n<\/div>\n Individual banks usually pass on any interest rate rises – giving savers a higher return on their money. <\/p>\n<\/div>\n<\/div>\n However, for people putting money away, interest rates are not keeping up with rising prices.<\/p>\n<\/div>\n<\/div>\n Interest rates are decided by a team of nine economists, the Monetary Policy Committee. <\/p>\n<\/div>\n<\/div>\n They meet eight times a year – roughly once every six weeks – to look at how the economy is performing.<\/p>\n<\/div>\n<\/div>\n Their decisions are always published at 12:00 on a Thursday.<\/p>\n<\/div>\n<\/div>\n The UK is affected by prices rising across the globe. So there is a limit as to how effective UK interest rate rises will be.<\/p>\n<\/div>\n<\/div>\n However, other countries are taking a similar approach, and have also been raising interest rates<\/p>\n<\/div>\n<\/div>\n How will you be affected by any change to interest rates? Share your experiences by emailing <\/b>haveyoursay@bbc.co.uk<\/a>.<\/b><\/p>\n<\/div>\n<\/div>\n Please include a contact number if you are willing to speak to a BBC journalist. You can also get in touch in the following ways:<\/p>\n<\/div>\n<\/div>\n If you are reading this page and can’t see the form you will need to visit the mobile version of the BBC website<\/a> to submit your question or comment or you can email us at HaveYourSay@bbc.co.uk<\/a>. Please include your name, age and location with any submission. <\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
Personal finance correspondent, BBC News<\/span><\/p>\n<\/header>\n![\"Woman](\"https:\/\/ichef.bbci.co.uk\/news\/240\/cpsprodpb\/3F87\/production\/_125436261_womanusingatm_getty.jpg.webp)
Why does raising interest rates help lower inflation?<\/span><\/h2>\n<\/p>\n
How high could interest rates go?<\/span><\/h2>\n<\/p>\n
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How do interest rates affect me?<\/span><\/h2>\n<\/p>\n
How does the Bank of England set interest rates?<\/span><\/h2>\n<\/p>\n
Are other countries raising their interest rates?<\/span><\/h2>\n<\/p>\n
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