The Bank of England (BoE) has raised the base rate by 50 basis points, increasing it to 2.25%.
This is the highest the base rate has been for 14 years.
The Monetary Policy Committee (MPC) meeting minutes say that five members voted for a 50 basis point increase, three members wanted an increase of 75 basis points and one member voted for a 25 basis point raise.
The move aims to help counter rising inflation, which the BoE now predicts will hit 13% before year end.
The Office for National Statistics’ latest data shows that inflation dipped from 10.1% in July to 9.9% in August.
This is the seventh time the MPC has raised the base rate since December 2021, the most recent action being a rise of 50 basis points to 1.75% in August, the biggest hike seen in 27 years.
Fine & Country managing director Nicky Stevenson says: “The BoE and the government don’t appear to be singing from the same hymn sheet.
“Rate-setters are taking money out of people’s pockets in an effort to cool the economy, while at the same time Liz Truss and her team are signposting their intention to radically overhaul the tax system in an effort to boost growth.
“While many forecasters are trimming their expectations for future house price gains following a series of interest rate hikes, the effects of this monetary tightening could well be mitigated by the cuts to stamp duty expected to be announced as part of the mini-budget.
“Against this backdrop, we expect the debate over the Bank’s independence to intensify in the weeks ahead.”