This is the 11th consecutive rise the Bank’s Monetary Policy Committee (MPC) has pushed through as it struggles to bring inflation down. At today’s meeting, the MPC voted by a majority of 7–2 to increase the base rate by 0.25 percentage points, to 4.25%. Two members preferred to maintain Bank Rate at 4%.

Kevin Brown, savings specialist at Scottish Friendly, said: “The shock announcement yesterday that inflation had spiked after falling for three consecutive months, has left the Monetary Policy Committee with little option but to hike rates once again.

“Nervousness about the stability of the global financial system had raised question marks over whether central banks could push through further rate rises at the time, but inflationary pressures continue to unsettle central banks.

“Ultimately, inflation remains the greatest threat to the UK economy and it’s what the government and the Monetary Policy Committee have their eyes firmly set on.

“But it’s a double blow for households who are still grappling with surging prices, particularly on food and drink, and will now also face higher borrowing costs.

“The only silver lining will be if banks and building societies pass on the rise in base rate to savers. By shopping around savers can find some accounts paying over 4.5% but with inflation where it is, anything above and beyond this would be extremely welcome.

“However, we are a long way from saving rates exceeding inflation, so the best bet for anyone looking for higher returns may be to invest their money instead.”

Jonathan Moyes, head of investment research at Wealth Club, added: “The US and Europe have come very close to a banking crisis over the previous two weeks and monetary conditions will tighten significantly as a result, placing further strain on the sector.

“We will have to wait for the May report to get the MPC’s full assessment of the recent turmoil, however, it is pleasing to see the FPC reiterate its confidence in the strength of the UK banking sector.

“With inflation expected to fall rapidly in the near term and interest rates close to their peak, it seems the inflation beast has been tamed. However, we may soon discover ‘the cure is worse than the disease’ as the banking sector groans under the weight of aggressive rate rises.”

David Alexander, CEO of DJ Alexander Scotland, has questioned “the point of the latest increase”, as “we now know that the country will not go into recession” and “that inflation is set to fall substantially in the coming months”.

He continued: “Yet a very small increase in inflation this week has prompted a further hike in interest rates from the Bank of England.”

“By the time the impact of this rise filters through to the market inflation is likely to be down several percentage points and these multiple increases will actually be doing more harm than good.

“This all smacks of using a hammer to crack a nut and I would have thought, with a slowing housing market, that the most sensible action would have been to keep interest rates on hold and continue to watch to see what happens with the economy.”

Mr Alexander concluded: “If inflation suddenly drops by 1% next month will they then decide to reduce interest rates in response. I believe that the Bank of England has been too interventionist over the last year and have sought to micro manage the economy in a way which simply doesn’t work.

“A little less action on rates and a bit more conversation explaining the benefits of rate stability would be more beneficial for the economy and the consumer.”