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James Andrews, senior personal finance editor at money.co.uk, said: “The Bank’s decision will prove to be either incredibly damaging or wonderfully foresighted depending on what happens over the next few months.

“One thing we can say for certain is that it will do almost nothing to bring down the cost of living for households across the UK - which is being driven by global energy prices and supply chain issues.

“Another thing we can say for certain is that it will make borrowing more expensive at a time when more and more people are being forced into debt to meet rising bills.

“We can also say with some certainty that it will put downward pressure on house prices - making mortgages more expensive at a time that rising essential bills make them less affordable too.

“So what’s the upside? If the Bank is proved right, then action now will stop wage rises turning this year’s high inflation into a permanent feature of the economy.

“But if they’re wrong, they’ll simply accelerate the UK’s path into recession and a possible house price crash, all the while making the current cost of living crisis even worse for people struggling with debts.”

Find a breakdown of how the UK's bills have increased in recent years via our cost of living statistics page, where we have analysed the latest data and trends.

press@money.co.uk