The Bank of England has voted to raise interest rates to their highest level since 2008, which was also the single-biggest rise since 1995.

The nine members of the Monetary Policy Committee (MPC) voted eight to one in favour of a rise to 1.75%.

Silvana Tenreyro was the solitary member of the MPC out-voted in calling for a quarter point rise to 1.5%.

In minutes from the rates decision meeting, the Bank said the majority of the MPC felt a “more forceful policy action was justified”.

It said: “Against the backdrop of another jump in energy prices, there had been indications that inflationary pressures were becoming more persistent and broadening to more domestically driven sectors.”

Bournemouth Echo: Out of the nine Bank of England MPC members, eight voted to increase the rates to 1.75 per cent (PA)Out of the nine Bank of England MPC members, eight voted to increase the rates to 1.75 per cent (PA) (Image: PA)

“Overall, a faster pace of policy tightening at this meeting would help to bring inflation back to the 2% target sustainably in the medium term, and to reduce the risks of a more extended and costly tightening cycle later,” the Bank added.

The value of the pound dropped 0.05% lower against the US dollar at 1.211 shortly after the Bank of England’s rate rise was confirmed, having been 0.7% higher ahead of the announcement.

Additionally, the pound has dropped 0.5% against the euro to 1.189.

What did politicians have to say on interest rates?

Tory leadership hopeful and former chancellor Rishi Sunak said: “One of the most urgent challenges we face as a country is getting inflation under control as quickly as possible.

“The Bank has acted today and it is imperative that any future government grips inflation, not exacerbates it.

“Increasing borrowing will put upward pressure on interest rates, which will mean increased payments on people’s mortgages. It will also make high inflation and high prices last for longer, making everyone poorer.

“As prime minister I would prioritise gripping inflation, growing the economy and then cutting taxes.”

Meanwhile, Shadow chancellor Rachel Reeves was more critical. She said: “This is further proof that the Conservatives have lost control of the economy, with skyrocketing inflation set to continue, while mortgage and borrowing rates continue to rise.

“As families and pensioners worry about how they’re going to pay their bills, the Tory leadership candidates are touring the country announcing unworkable policies that will do nothing to help people get through this crisis.”