Bank of England hints that UK borrowing rates will stay high after its new hike

abcnews.go.com:

The Bank of England has raised its main interest rate to a fresh 15-year high as it tries to bring down persistently high inflation

LONDON — The Bank of England raised its main interest rate Thursday to a fresh 15-year high and indicated it would stay high for some time to bring down persistently high inflation — another potential blow for those seeing their rents and mortgages rise during a cost-of-living crisis.

The widely anticipated quarter-percentage point increase, to 5.25%, was the central bank’s 14th hike in a row. The bank said some of the risks from more stubborn inflation, notably higher wages, had “begun to crystallize,” leading it to push borrowing costs higher.

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% eased the pressure to act as aggressively again.

In new forecasts, the central bank said inflation is expected to drop to 4.9% by the end of the year, with food price rises set to moderate.

“Inflation is falling, and that’s good news,” bank Gov. Andrew Bailey said. “We know that inflation hits the least well-off the hardest, and we need to make absolutely sure that it falls all the way back to the 2% target.”

With inflation four times that level, the bank is widely expected to hike again — potentially once more in September — before taking a pause as previous increases work through the economy. The effects of higher interest rates have a lag, most notably in the housing market, where many households will have to refinance their mortgages in the months to come at a higher cost.

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