Bank of England raises interest rates for 10th time this year

The Bank of EnglandBank of England raised interest rates by 0.5 percentage points to 4%, causing more pressure on mortgage payers and businesses struggling to pay off their loans.

In a move expected by City economists, the Bank monetary policy committee voted for the 10th consecutive time to raise the cost of borrowing to a fresh 14 year high. Since October 2008, UK rates have gone to the highest level since October 2008, when the Bank had just started cutting rates in response to the financial crisis.

The central bank wants to reduce consumer spending in order to tackle an inflation rate that is currently at 10.5%, well above its 2% target.

According to some business surveys, Britain's economy is poised to enter a recession this year, spearheaded by the manufacturing sector, which has contracted for the last six months.

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