Interest rates expected to rise for first time in over three years

Policymakers at the Bank of England are expected to raise interest rates on Thursday in what would be the first increase to the benchmark rate for more than three years. Most analysts are predicting an rise from 3.75% to 4% in a move that would increase the cost of borrowing for individuals and businesses, but boost savers.

The Bank rate has fallen from its 2023-24 peak of 5.25%, although the Bank's Monetary Policy Committee (MPC) has left the rate unchanged at its last six meetings. Rising inflation, driven primarily by the cost of petrol and diesel, will push policymakers into an interest rate hike, analysts suggest.

"The decision is increasingly less about whether rates reach 4% and more about what follows after that," said Chris Cheverall, head of UK at trading platform CMC Markets.