Bank increases interest rate for 10th time in a row

The Bank of England raised UK interest rates by a further half percentage point to four per cent yesterday - but provided some optimism that borrowing costs may now be nearing their peak.

Although this was the tenth successive interest rate increase, the Bank hinted there is a chance it might be the last for the time being, stating it would only raise rates further “if there were to be evidence of more persistent [inflationary] pressures ” than in its forecasts.

Forecasts suggest that inflation has now peaked will come down gradually this year and next, eventually dropping beneath the Bank 's 2 per cent target.

Raj Kandola (pictured), head of policy at Greater Birmingham Chambers of Commerce, said: “Although the Bank of England have taken the decision to raise rates to a level not seen in 14 years, many city analysts will have noted the shift in tone from the Monetary Policy Committee.

“As witnessed in our latest Quarterly Business Report, local businesses have continually expressed their concerns over the impact of interest rate hikes - in particular, those firms that are burdened with debt and reeling from huge cost pressures will be feeling the strain even further following yesterday's announcement.

“Nevertheless, as we're seeing a sharp fall in energy prices, we can only hope that the Bank's projections of an economic downturn become less pronounced for the rest of the year.

“In addition, it's clear that we need to see fiscal policy work in tandem with monetary to produce a platform for businesses to grow in the long term - the upcoming Spring Statement provides the perfect platform for the Government to offer these reassurances. ”

The GBCC 's Quarterly Business Report briefing for Q4 focuses on Growth in Greater Birmingham - book your place.