The Bank of England has raised interest rates to 3.5 per cent from three per cent, the highest for more than 14 years.

The rise is the ninth in a row and will mean a rise in mortgage payments for some borrowers.

Six members of the Bank of England’s nine-strong Monetary Policy Committee voted to raise its interest base rate by half a percentage point.

However, two members of the committee – Swati Dhingra and Silvana Tenreyro – voted in favour of holding rates at three per cent.

Another member, Catherine Mann, called for a firmer 0.75 percentage point increase, at the meeting held on Wednesday.

Less than a year ago, the rate was 0.1 per cent.

The bank is tasked with bringing inflation down to a target of two per cent.

The decision comes after official figures on Wednesday showed inflation eased back by more than expected, to 10.7 per cent in November from October’s 41-year high of 11.1 per cent.

Adam Ruddle, chief investment officer at Dorset-based life, pensions and investment business LV=, said:  “The Bank of England’s decision to raise interest rates by 0.5 percentage points to 3.5 per cent is in line with our expectations.

"Though beginning to fall, inflation remains at over five times the Bank of England’s target, squeezing the incomes of millions of people in Britain.  The Bank has been clear that managing inflation down is its key responsibility – even if that means subdued economic growth.

"While an increased rate helps tackle inflation it hinders economic growth and increases mortgage payments. It is increasingly likely that inflation may remain entrenched for longer than previously expected which means that interest rates will continue to rise and remain at higher levels for longer likely reaching four per cent by the end of 2023.”

The monetary policy committee said that there are "considerable" uncertainties around the UK's outlook and said it will respond "forcefully, as necessary".

"Should the economy evolve broadly in line with the November Monetary Policy Report projections, further increases in Bank Rate might be required for a sustainable return of inflation to target," the bank said.

The bank expects UK gross domestic product to decline by 0.1 per cent in the final quarter of 2022, 0.2 percentage points stronger than expected in the bank's November report.

It added that inflation is expected to continue to fall gradually over the first quarter of 2023, as earlier increases in energy and other goods prices drop out of the annual comparison.