Bank of England raises its key interest rate to a new 15-year high to fight inflation

The Bank of England raised its main interest rate on Thursday to a fresh 15-year high as it tries to bring down persistently high inflation. The quarter-percentage point increase to 5.25 per cent, which was widely anticipated by economists, was the central bank's 14th hike in a row.

There had been fears, certainly among hard-pressed households and businesses, that the bank would repeat its outsized half-point increase from June.

But figures last month showing that inflation fell more than anticipated to 7.9 per cent eased the pressure to act as aggressively again.

With inflation four times the bank's 2 per cent target, the bank is expected to raise interest rates again over the coming months. Economists said the interest rate outlook will depend largely on how fast inflation comes down.

Higher interest rates help dampen inflation — but also economic growth — by making it more expensive for consumers and businesses to borrow to buy homes, cars or equipment.