The Bank of England has raised UK interest rates to their highest level for 14 years as it battles to stem soaring prices.

It increased them to 3.5% from 3%, marking the ninth time in a row it has hiked interest rates.

The rise will mean higher mortgage payments for some homeowners and those with loans at a time when many people are struggling with the cost of living.

It should also benefit savers, if banks pass on the higher rate to customers.

The Bank of England has been attempting to calm rising prices since the end of last year.

Inflation – the rate at which prices rise – has been increasing at its fastest rate for 40 years as the cost of food and energy soars.

Raising interest rates should, in theory, encourage people to borrow and spend less and save more. This should help bring down the rate of inflation.

Announcing its latest rise, the Bank indicated it was likely to continue to increase interest rates next year.

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