Reported by BBC Business
Policymakers at the Bank of England are expected to raise interest rates on Thursday in what would be the first increase to the benchmark rate for more than three years.
Most analysts are predicting an rise from 3.75% to 4% in a move that would increase the cost of borrowing for individuals and businesses, but boost savers.
The Bank rate has fallen from its 2023-24 peak of 5.25%, although the Bank's Monetary Policy Committee (MPC) has left the rate unchanged at its last six meetings.
More from the original report
Rising inflation, driven primarily by the cost of petrol and diesel, will push policymakers into an interest rate hike, analysts suggest.
The announcement will be made by the Bank at 12:00 GMT on Thursday.
Close attention will also be paid to any hints from the MPC on the future direction of interest rates.
"The decision is increasingly less about whether rates reach 4% and more about what follows after that," said Chris Cheverall, head of UK at trading platform CMC Markets.
"A quarter-point rise is already widely expected, but the Bank now has to balance inflation that is still too high against an economy where the growth outlook has weakened sharply."
The Consumer Prices Index (CPI) measure of inflation is well below its peak of a few years ago but has been heading back up and is expected to go higher.
It was 3.5% in the year to September 2026 , up from 3.1% the previous month and well above the central bank's 2% target.
The ongoing impact of the Iran war, primarily on the cost of energy and fuel, has filtered through to the UK inflation rate. Millions of domestic energy customers are braced for a hefty rise in prices in January.
Its base rate is what it charges other banks and building societies to borrow money, which influences what they charge their own customers for mortgages as well as the interest rate they pay on savings.
Were the Bank rate to rise, there would be an immediate impact on the 510,000 tracker mortgage-holders.
A 0.25 percentage point rise would mean a £31 increase…