The Bank of England’s Monetary Policy Committee (MPC) has voted by a majority of 7-2 to increase the Bank Rate by 0.75 percentage points, to 3%.

One member preferred to increase Bank Rate by 0.5 percentage points, to 2.75%, and one member preferred to increase Bank Rate by 0.25 percentage points, to 2.5%.

This is the largest increase in rates since 1989, non including Black Wednesday in 1992.

Paul Heywood, chief data & analytics officer at Equifax UK, said: “In the face of double-digit inflation, a looming recession, and interest rates at a 40-year high, today people are facing a nail-biting wait to find out what the Chancellor has in store in the now delayed Autumn Statement. The prevailing wisdom is that the UK consumer will be facing rising taxes and are already looking to find the best savings rates as they reduce spending and brace for what will undoubtedly be a challenging winter.

“The government’s decision to delay the Autumn Statement may have spared the government from unhelpful Halloween headlines, but it looks to have also impacted the Bank of England, which has acted resolutely to increase interest rates to levels not seen since the turn of the century. People now face tough borrowing decisions, particularly those on lower incomes whose disposable incomes have been eroded thanks to increased food and fuel prices this year. Middle earners will also continue to feel the pinch as mortgage rates rise, compounded by the expectation of falling house prices.”

Adam Ruddle, chief investment officer at LV=, added: “The Bank of England’s decision to raise interest rates by 0.75% is in line with our expectations. The Bank has been clear that managing inflation down is their key responsibility – even if that means subdued economic growth. While an increased rate helps tackle inflation it hinders economic growth.

“The Bank’s views on inflation have fallen as a result of the Energy Price Capping initiatives but risks have increased that inflation may remain entrenched for longer than previously expected. This likely means that interest rates will continue to rise and remain at higher levels for longer. We anticipate that interest rates will continue to rise and may reach 3.75% by the end of 2023.”