UK interest rate rises to 5%

UK interest rates have been raised more than expected in a shock move aimed at slowing soaring price rises."Inflation is still too high and we've got to deal with it," Bank of England boss Andrew Bailey said.

The Bank's Monetary Policy Committee , which sets UK rates, said that inflation in the services sector remained persistently high, while wages were growing faster than it had predicted back in May. But he added that the Bank would continue to monitor inflation closely, and would further tighten monetary policy if there "were evidence of more persistent pressures"Interest rates remain the Bank's primary tool to lower inflation, despite debate over its effectiveness.

According to financial data firm Moneyfacts, the average two-year fixed residential mortgage now stands at 6.19% while the five-year rate is 5.82%. In June last year, those rates were closer to 3%.

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