The Bank of England has raised UK interest rates to 3.5% in a move branded as bad news for business.
The hike, up from 3%, takes rates to their highest level for 14 years.
David Bharier, Head of Research at the British Chambers of Commerce (BCC), said: “Today’s interest rate rise to 3.5%, while expected, adds further pressure to firms facing soaring costs from all directions.
“With some evidence of inflation now beginning to ease, it will be vital that further interest rate action does not exacerbate the recession the UK is entering.
“Today’s increase to the interest rate will come as bad news for both mortgage holders and firms that have higher borrowing costs, particularly those who need to buy in bulk to mitigate against supply chain shocks.
“The Bank of England now faces a conundrum of when to ease monetary policy, given that the main drivers of inflation have shifted from external factors, such as shipping and raw material costs, to domestic factors, such as energy and labour costs.
“Only business investment and growth will solve the stagflation problem. Firms need to see concrete actions on the measures that produce the right environment to invest, such as infrastructure, skills, and trade.”
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