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A no-deal Brexit would "mean disruption to trade as we know it and as a effect of that a disruption to a level of economic activity, higher prices for a period of time", he added.

Tej Parikh, senior economist at the Institute of Directors, said:"The Bank has jumped the gun with the today's rate hike". However it doesn't actually change too much on the ground. The move had been widely expected, with markets...

John Macintosh, head of tax in for Deloitte in scotland, said: "Sub-trend growth and a cloudy outlook hardly make a compelling case for a higher United Kingdom rates". Even though rates are very low and will remain so for the foreseeable future, they can still move down if there is an economic shock to the system.

The BoE said Britain's economy, while growing more slowly than in the past ahead of Brexit, was operating at nearly its "speed limit", or full capacity, raising the prospect of more home-grown inflation pressure ahead.

This quicker transmission in the deposit rate could be partly attributed to the reversal of the interest rate regime witnessed in recent months, said CARE.

However, it will offer some relief to savers who have seen their nest eggs decimated by above-target inflation and negligible returns. This has now gone down to 0.63%, but it's still higher than it was before the rate increased at the end of 2017.

It will come as a blow to millions of mortgage borrowers on variable rate deals, with a quarter point rise adding around £16 a month and £190 a year to the average mortgage.

In the shorter term, the Bank Rate implied by a so-called equilibrium real interest rate, or "r*", was likely to be somewhat lower, the BoE said, without giving a precise estimate. Once this period is up, people on a fixed interest rate mortgage may see their monthly payments go up unless they remortgage and find a cheaper deal. This means savers must be on the ball to ensure they get the best possible deal. He said the rate hike came on the heels of a meeting with Union Housing and Urban Affairs Minister Hardeep Puri to discuss measures to put real estate sector "back on track".

Money Saving Expert Martin Lewis recently revealed how you can save £1000s on your mortgage in minutes.

Why is the interest rate going up?


Mark Carney has warned that the possibility of a no-deal Brexit is "uncomfortably high" and will lead to higher prices, as Theresa May prepares to meet the French president, Emmanuel Macron, for talks.

Who decided how much it went up by?


The Reserve Bank of India (RBI) hiked the repo rate (at which it lends to banks) by 0.25 per cent to 6.5 per cent and the reverse repo rate (at which it borrows from banks) to 6.25 per cent.

Banks and building societies have been outlining how they plan to apply the base rate increase from 0.5 per cent to 0.75 per cent.

"We think the bank wants to raise rates in a gradual way and that would be consistent with the next one in February", he said.