The Bank of England has raised interest rates by a quarter of a point to 5.25% in an effort to curb inflation.
The Bank of England has raised interest rates by a quarter of a point to 5.25% in an effort to curb inflation.
Analysts had been anticipating a rate rise in the near future although they expected policymakers to wait until next month to take action.
Analysts had been anticipating a rate rise in the near future although they expected policymakers to wait until next month to take action.
Consumer price inflation has recently risen to 2.7%, the highest level in more than a decade.
Consumer price inflation has recently risen to 2.7%, the highest level in more than a decade.
Policymakers increased the cost of borrowing twice last year in an effort to stem inflationary pressures.
Policymakers increased the cost of borrowing twice last year in an effort to stem inflationary pressures.
'Surprise'
'Surprise'
In a statement announcing its decision, the Bank of England said it expected consumer inflation to rise further in the near future.
In a statement announcing its decision, the Bank of England said it expected consumer inflation to rise further in the near future.
Inflation is already well above the government's 2% target and some analysts believe it will exceed 3% when the latest figures are published this month.
Inflation is already well above the government's 2% target and some analysts believe it will exceed 3% when the latest figures are published this month.
"The timing is a surprise," said Ross Walker, UK economist with the Royal Bank of Scotland.
"The timing is a surprise," said Ross Walker, UK economist with the Royal Bank of Scotland.
"What this perhaps tells us is that we have a nasty inflation number coming next week and they wanted to act pre-emptively."
"What this perhaps tells us is that we have a nasty inflation number coming next week and they wanted to act pre-emptively."
Employer groups expressed disappointment at the move, saying it could harm already struggling businesses.
Employer groups expressed disappointment at the move, saying it could harm already struggling businesses.
"If part of the intention was to dampen wage increases, it is doubtful a rate rise will have the desired effect," said Ian McCafferty, the CBI's chief economic adviser.
"If part of the intention was to dampen wage increases, it is doubtful a rate rise will have the desired effect," said Ian McCafferty, the CBI's chief economic adviser.
Are you surprised by the rise? How will you be affected? Send us your comments using the form below.
