It marks the 14th consecutive increase in rates, which the Bank warns will continue to remain high for at least the next two years.

The Monetary Policy Committee (MPC) increased the base rate from 5% to 5.25%, after it voted by a majority of six to three. Only one member voted to keep rates at 5%.

Two members of the MPC voted to increase interest rates by a sharper 0.5% following forecasts that had ‘under-predicted’ inflationary pressures. The last time interest rates were above 5.25% was in February 2008, when it stood at 5.5%. The Bank expects inflation to fall to 4.9% by December this year but will only return to 2% target by early 2025.

The Bank said: ‘CPI inflation remains well above the 2% target. It is expected to fall significantly further, to around 5% by the end of the year, accounted for by lower energy, and to a lesser degree, food and core goods price inflation.