Why has the Bank of England increased interest rates? It ran out of options | Michael Jacobs

The Bank has done everything to keep the failing economy moving. But this rise shows the problem lies with the government's continued fiscal austerity

" Michael Jacobs is director of the Institute for Public Policy Research's commission on economic justice

The 0.25% rate rise announced this morning is not a normal interest rate rise. But that is because we are living through abnormal economic times.

Usually the Bank of England would raise interest rates when the economy was beginning to "overheat" - that is, when consumer and business demand was accelerating. But no one could say the economy was overheating today.

Lenders have already bumped up the cost of fixed rate mortgages ahead of the Bank of England's decision to raise base rate from 0.25% to 0.5%, and mortgage borrowers on tracker and variable rates will see their monthly payments become more expensive in the coming days. "

Related: What the interest rate rise will mean for you

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