UK interest rate rise – latest: Bank of England expected to unveil biggest hike in 33 years

“Investors think the most likely outcome is that the MPC will increase the Bank rate by 75bp (0.75 percentage points) on Thursday,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

But he said that economists are expecting a smaller rise, to 2.5 per cent – the same 0.5 percentage point change as the Bank’s last hike.

“For a start, hawkish surprises from the MPC have been far less common than dovish ones over the last year,” he said.

“In addition, governor Bailey openly referred to a 50bp hike ahead of the August meeting, but has not given markets a nudge to price-in a 75bp hike.

“We think that the MPC still will deem a 50bp increase to be consistent with its pledge to act ‘forcefully’, if it sees signs of more persistent inflationary pressures.”

ING economist James Smith said that the Bank of England will have to react to recent falls in the price of the pound. Sterling hit a new 37-year low against the dollar on Friday.

“The Bank of England meeting is crucial,” he said.

“It will tell us not only how worried policymakers are about the slide in sterling and other UK markets, but also how the government’s decision to cap household/business energy prices will translate into monetary policy.”

“We narrowly favour a 50bp hike on Thursday, taking the Bank Rate to 2.25 per cent, although 75bp is clearly on the table and we would expect at least a couple of policymakers to vote for it.”

He said that rates will likely rise again in November and December, hitting 3 per cent by the end of the year.

The Bank of England had been due to make an announcement earlier in the month but this was postponed due to the Queen’s death.

Its monetary policy committee was scheduled meet yesterday to finalise the announcement, which is expected around midday.

Markets think the Bank will unveil the biggest hike in interest rates for over three decades.

An interest rate is a measure that tells you how high the cost of borrowing money is, or how high the rewards of saving are.

If you are borrowing money, typically from a bank, the interest rate on that money is the amount you will be charged for borrowing it.

It is a charge on top of the total amount of the loan and will be shown as a percentage of the overall.

My colleague Holly Bancroft has more:

Good morning and welcome to The Independent’s rolling coverage of the Bank of England’s announcement on interest rates.

Analysts expect the rate to be hiked by at least 0.5 per cent, possibly 0.75 per cent, in what would be the biggest rise in some 30 years.

The Bank’s announcement is expected around midday. We’ll bring you all the latest news and reaction as it comes in.