UK interest rates have increased by 50 basis points to 2.25% – the seventh time in a row the Bank of England has raised the cost of borrowing as it battles soaring prices.

The decision takes the base rate to its highest level since the banking crisis in 2008.

Interest rates have been rising since last December as inflation has swelled to 10.1%, its worst level in four decades.

There was a three-way split on the Bank’s nine-member monetary policy committee with three wanting a 75 basis points rise and the newest member, Swati Dhingra, wanting a more limited 25 points rise.

After earlier falling against the dollar, down 18% year-on-year, the pound rallied following the decision and was up 0.7442% at $1.1337.

Markets may be relieved that the Bank did not decide to match the US Federal Reserve’s decision last night to lift rates by 75 basis points. However, further rate rises are likely as central banks take an aggressive approach to controlling inflation.

… more follows