The Bank of England has cautioned that price rises would not reduce as rapidly as predicted due to rising food costs.

In an effort to limit price increases, the Fed raised interest rates to 4.5% from 4.25%.

The Bank predicted that inflation would “fall sharply in April,” but not as far or as quickly as previously predicted.

However, it was more positive about the UK’s growth prospects, predicting that it will avoid recession and lifting its predictions by the most in 26 years.

The shift in the economy’s outlook compares dramatically with the Bank’s forecast six months ago, when it predicted the UK would enter the deepest recession on record.

Andrew Bailey, governor of the Bank of England, now predicts “modest but positive growth.”

When the effects of strikes and the extra Bank Holiday for King Charles’ Coronation are removed, the Bank expects that the economy will have risen by 0.2% in the first three months of the year, as well as between April and June.

However, despite the Bank raising interest rates 12 times in a row since December 2021 to their highest level in nearly 15 years, inflation is anticipated to take longer to ease.

Raising interest rates may cause consumers to save more money rather than borrow it.

In principle, this implies individuals have less money to spend and will buy fewer items, which should assist to slow the rate at which prices rise. It also makes it more difficult for businesses to borrow money and expand.

Some will see increased mortgage and loan payments as interest rates rise, while savers may gain.

A typical tracker mortgage client will pay roughly £417 more per month compared to pre-December 2021, before interest rates began to rise, and variable rate mortgage holders will pay about £266 more.