- Expect Interest Rates to rise further.
- The pound falls against the dollar on the rate rise news.
The Bank of England voted to raise rates from 0.25% to 0.5%.
Many millions of Britons have never experienced an interest rate rise in their adult lives, with borrowing costs languishing at historic lows since the 2008 financial crash.
The Bank of England has also warned that Britain’s decision to leave the European Union is having a “noticeable impact on the economic outlook”.
"The overshoot of inflation throughout the forecast predominantly reflects the effects on import prices of the referendum-related fall in sterling.
"Uncertainties associated with Brexit are weighing on domestic activity, which has slowed even as global growth has risen significantly.
"And Brexit-related constraints on investment and labour supply appear to be reinforcing the marked slowdown that has been increasingly evident in recent years in the rate at which the economy can grow without generating inflationary pressures"
The Bank of England says it interest rates could now rise gradually over the next three years.
The minutes of today’s meetings make it clear that the MPC is moving cautiously, with its first interest rate rise since Gordon Brown was prime minister.
The Bank says:
“The MPC now judges it appropriate to tighten modestly the stance of monetary policy in order to return inflation sustainably to target.
All members agree that any future increases in Bank Rate will be at a gradual pace and to a limited extent,”
That had an immediate impact on sterling -- the pound fell by one cent against the US dollar, to $1.314.
"There is not certainty for what will happen in the longer term, so the best you can do is prepare as much as you can.
And what about investments and protecting your wealth?
Rachel Rickard Straus, personal finance editor at www.thisismoney.co.uk said:
"The problem is inflation is at 3%. No savings rate will beat inflation. So, if you have got your money in a savings account, it is being eroded day by day. So, if you can afford to invest over the long term, that is one solution..."