The Bank of England has raised interest rates for the 10th time in a row, dropping a pledge to keep increasing them "forcefully" if needed.
The interest rate-setters voted 7-2 to increase Bank Rate to 4.0% – its highest since 2008 – from 3.5% .
The market reacted favourably, with the FTSE 100 dipping initially before bouncing back. The mid-cap index jumped 2.1%. The yield on Britain's 10-year government bond initially spiked but then fell below levels seen before the decision. It was last down 15 basis points to 3.156% .
The increase in Bank Rate is likely to have a significant impact on people's spending and inflation, and the economy as a whole. The rate is also likely to peak at 4.5% in the summer. This will mean higher mortgage and loan costs for borrowers, but better returns for savers across the UK.
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