In response to efforts to rein in price growth, the Bank of England hiked interest rates for the first time in more than three years.

Following statistics this week that showed prices rising at their quickest rate in ten years, the hike to 0.25 percent from 0.1 percent was made.

Despite concerns that the Omicron variation might slow the economy by leading people to spend less, it was approved.

Some homeowners’ mortgage costs may rise as a result of the Bank’s move.

According to the most recent numbers, the cost of living increased by 5.1 percent in the year to November.

That was the highest rate since September 2011, and it was significantly over the Bank’s 2% objective.

However, one industry group said that raising interest rates would do nothing to keep prices from rising since expenses were being driven up by global causes that were largely outside the Bank’s control.

The Bank of England’s decision would increase the average monthly repayment for a tracker mortgage client by slightly over £15 per month.

A normal variable rate mortgage holder will almost certainly pay an additional £10 each month.

One of these two types of mortgages is held by about two million persons in the United Kingdom.

While savers may be pleased with the announcement of higher rates, economists warn that there is no assurance that the higher Bank rate will result in higher savings returns.

Even if savings rates rise a little, returns will still be significantly below inflation.

The Bank of England has the power to boost interest rates to assist control inflation, but many analysts anticipated it to wait because of the uncertainty around Omicron.

However, it stated on Thursday that global asset values, like as equities and bonds, had generally rebounded following an initial drop in response to the new variant’s announcement.

The Bank also noted that previous waves of Covid looked to have had less of an impact on economic growth, albeit the extent to which this would be the case this time remained unknown.

It went on to say that “consumer price inflation in advanced economies has grown faster than projected.”

According to the Bank, the Omicron variety might limit economic activity early next year, however it is uncertain how big of an impact it would have on global inflation.

“Given increased uncertainty over the economic implications of the Omicron variant, the Bank of England’s decision to hike interest rates was surprise,” said Suren Thiru, head of economics at the British Chambers of Commerce.

“While today’s rate hike may have minimal impact on most businesses, many will see it as the start of a lengthier policy shift, rather than a partial rollback of last year’s decrease.”

He went on to say that the present inflationary rise was mostly caused by global causes, and that raising interest rates would do nothing to prevent additional inflationary increases.

Instead, he added, the government should focus on finding real answers to the UK’s supply chain issues and labor shortages.

The decision, according to Paul Dales, chief UK economist at Capital Economics, meant that the Bank had become “a little more hawkish” and that rates may now need to climb even higher than previously.

“The MPC has stated that a’modest tightening’ of monetary policy is likely to be required, so this does not appear to be a one-and-done situation,” he added.

“We still believe that slower economic growth and lower inflation will prevent interest rates from rising to 1% by the end of next year, but it’s becoming more probable that they will increase over our 0.5 percent prediction.”

The MPC also agreed to keep the Bank’s asset acquisition plan at £875 billion.

Interest rates were last hiked by the Bank in August 2018, when they reached 0.75 percent.

They were subsequently slashed twice more when the epidemic began in March 2020.