The Bank of England has increased the base rate by 0.25% to 4.5%.
The Bank's Monetary Policy Committee, which sets rates, cites continued global economic recovery coupled with figures suggesting continuing improvements in the UK.
"Household spending, public consumption and investment have all grown strongly and the housing market remains buoyant. The labour market has tightened further," the Bank says in a statement.
"CPI inflation has been below the 2% target, but cost pressures are rising. As indicated in the May Inflation Report, a small and diminishing margin of spare capacity means that inflationary pressures are likely to continue building."
"Against that background, the Committee judged that a further increase of 0.25 percentage points in the repo rate to 4.50% was necessary to keep CPI inflation on track to meet the target in the medium term."IFAonline
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