The Bank of England has just announced it will raise the base interest rate by 0.25%, the second increase in three months.
The decision means the UK base rate is now 4%, compared to 1% in the US and 2% in the eurozone.
The Monetary Policy Committee, which sets rates, says in a statement the increase was needed to ensure it meets inflation targets in the "medium term".
"Inflationary pressures are likely to pick up gradually over the next couple of years," it says.
Under new government rules, the Bank of England is supposed to keep annual consumer price inflation at or below 2%.
The MPC notes the global economy is improving, that output growth is up, and that business surveys point to continued improvments along with "resilient" household spending and borrowing.
It adds the rate rise is needed even though consumer price inflation is currently below its 2% target.IFAonline
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