Not everyone agreed with the MPC’s decision. Deputy governor Sir Jon Cunliffe voted to keep rates on hold but, forced to choose, the Bank took the path of higher interest rates. 

“Monetary policy should be tightened at this meeting in order to reduce the risk that recent trends in nominal pay growth, domestic pricing, and inflation expectations strengthened and became embedded, and thereby to help to ensure inflation was at target sustainably in the medium term,” the MPC said.

It is the committee’s third rate rise in as many meetings and others are following its lead. The Fed this week raised interest rates for the first time since 2018 and plans six more hikes this year alone.

Meanwhile, Christine Lagarde, president of the ECB, cautioned the war means “energy prices are expected to stay higher for longer”, “the pressure on food inflation is likely to increase” and “global manufacturing bottlenecks … are also now likely to persist in certain sectors, prolonging price pressures for durable goods”.

With inflation at its highest in a generation and interest rates set to rise to levels not seen since the financial crisis, dramatic ramifications are in store for the economy and households. 

A move to higher borrowing costs is tapping the brakes on the economy, but going too far or too fast risks tipping it into recession. The Bank estimates every 0.25 percentage point increase in rates cuts GDP by just under 0.2pc. 

Martin Beck, chief economic advisor to the EY Item Club, says the Bank will be wary of repeating the mistakes of central banks in the past that “over-reacted to supply shocks by raising interest rates too quickly and contributed to a recession”.

“Higher borrowing costs will exacerbate the mounting cost of living pressures faced by households from rising energy prices, the rising price of other essentials and forthcoming tax increases,” he says.

“To the extent that it may prove to be a policy ‘mistake’, the mistake should be a small one, reflecting the falling share of households with a mortgage and the dominance of fixed-rate mortgage debt.”

The 2.2m British households on a variable, or floating rate mortgage – which typically follows the base interest rate – will pay more immediately. 

For the vast majority that are on fixed rates, the impact will come when their deals are renewed. The average rate on a two-year fix has already risen from 1.2pc in September, to 1.8pc in February.