The Bank of England (BoE), as analysts expected, raised interest rates again to 0.5% on Thursday afternoon, which is the first back-to-back UK hike since 2004.
"At [the Monetary Policy Committee's] meeting ending on 2 February 2022, the MPC voted by a majority of 5-4 to increase Bank Rate by 0.25 percentage points, to 0.5%.
"Those members in the minority preferred to increase Bank Rate by 0.5 percentage points, to 0.75%," the BoE said.
Many market commentators are hawkish on the matter, predicting that rates will reach 1.25% by the end of this year with four rate hikes and possibly even a sequence of four monthly rises one after another not ruled out.
With the Bank Rate reaching 0.5%, the MPC confirmed that the corporate bond-buying programme will stop.
"The Committee agrees that the BoE should cease to reinvest any maturities falling due from its stock of sterling non-financial investment-grade corporate bond purchases and that it should initiate a programme of corporate bond sales to be completed no earlier than towards the end of 2023 that should unwind fully the stock of corporate bond purchases," the BoE added.
This would see the end of roughly £28bn of monetary stimulus with a further £9bn dropped over the remainder of the year.
Deutsche Bank's economists also anticipate a further 25 basis points (0.25%) hike in interest rates in August, followed by hikes in February 2023 and August 2023, taking the Bank Rate up to 1.25%.
Of course, this is speculation, and the BoE has wrong-footed markets before, especially as inflation is the concern and this might yet ease, according to the EY Item Club’s Martin Beck.
"The extent of any further tightening in monetary policy will depend on the medium-term prospects for inflation.
"The MPC judges that, if the economy develops broadly in line with the February report central projections, some further modest tightening in monetary policy is likely to be appropriate in the coming months," the BoE added.
With Ofgem having confirmed a 50% rise in the energy price cap on Thursday it will boost household bills to approximately £2000 per year from April.
National insurance (NI) tax will also shoot up 1.25 percentage points from the new financial year in April.
So, homeowners are set to face a triple financial whammy, with the interest rate climb raising mortgage payments, NI hike reducing real wages, and surging energy bills all set to squeeze budgets higher than ever.
“April [is] set to be [the] cruellest month in decades,” Interactive Investor commented.