Bank of England raises interest rates to highest level since 2009- what does it mean?

Interest rates have risen to 1.75% from 1.25%- the highest level since January 2009 and the biggest rise for nearly 30 years.

The Bank of England said a "more forceful policy action" was needed to combat rising inflation, which could hit 13% by the end of the year.

That's the figure that's driving price increases reflected in household bills and in supermarkets and shops.

The Bank said that another jump in energy prices suggested "inflationary pressures" are becoming "more persistent and broadening to more domestically driven sectors".

It added: "Overall, a faster pace of policy tightening at this meeting would help to bring inflation back to the 2% target sustainably in the medium term, and to reduce the risks of a more extended and costly tightening cycle later".

What does it mean for us?

Interest rates tell us how high the cost of borrowing is, or how high the rewards are for saving.

So, the interest rate is the amount we're charged for borrowing money, for example, a mortgage or paying on a credit card.

The higher the percentage, the more you have to pay back.

If you're a saver, the rate tells you how much money will be paid into your account, as a percentage of your savings.

The higher the savings rate, the more money will be paid into your account.

The Bank of England says as interest rates rise, borrowing could become more expensive for you.

It's example states: "Imagine you have a £130,000 mortgage that you want to pay off over 25 years. If the interest rate on the mortgage is 2.5%, the monthly repayment will be £583.

But if the interest rate is 1% higher, the monthly repayment will be higher, at £651.

Of course, interest rates can go down as well as up. If the mortgage interest rate was 1% lower, the monthly repayment would be around £520."

Young more concerned about economic pressures

Almost two-thirds of Britons say they're concerned about rising interest rates, with almost half worried about paying the rent or mortgage repayments.

In a poll published by Ipsos on Thursday morning, 64% of people said they were fairly or very concerned about the prospect of rising interest rates - a figure that rose to 80% among those aged 18 to 34.

Some 67% said they were worried about the value of their savings, while concern about energy bills and the rising cost of living in general reached 75% and 89% respectively.

Gideon Skinner, head of political research at Ipsos in the UK, said: "We know that concern about the cost of living and inflation is at the top of the public's agenda".

Interest rates have already increased from 0.1% in December to 1.25% in June as the Bank of England attempted to keep a lid on inflation, but are now expected to increase even further to 1.75%.

The poll also found levels of economic concern were higher among younger people.

While 45% of the public in general said they were concerned about paying the rent or mortgage repayments, that figure was 59% among those aged 18 to 44 but only 22% among those aged between 55 and 75.

Similarly, 58% of 18-44s said they had faced some form of financial difficulty in the last six months, compared to 38% of 55-75s.

Mr Skinner said: "This research also shows that while concerns about the cost of living, bills and savings are shared across all age groups, worries about housing costs (and rising house prices) are particularly acute among younger people, who are already more likely to say they have experienced a range of financial difficulties since the start of the year."

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