The Bank of England has raised the base rate by 0.25 percentage points to 5.25%, the highest since February 2008, in an attempt to curb inflation.

The bank said the rise was intended to make sure inflation keeps falling and stays low, adding that it expects to reach the 2% inflation target by early 2025.

UK Inflation stood at 7.3% in June according to Office of National Statistics (ONS) data, having fallen from a high of 9.6% in October 2022, which was the highest for nearly 30 years.

Mahmoud Alkudsi, senior market strategist at Abu Dhabi-based securities brokerage ADSS said the base rate is now more likely to remain over 5% for the duration of 2024. 

“With a 5.75% or even 6% peak later this year on the cards, the odds of the base rate remaining over 5% throughout 2024 are increasing higher, with the market viewing this as a likely scenario.”

(Reporting by Imogen Lillywhite; editing by Seban Scaria)