The Bank of England has raised interest rates by 0.25% to 4.5% and they now forecast there will be no recession this year.
The economic growth has been upgraded but the Bank warned inflation will be higher this year than they had previously thought.
Simon Massey, managing partner at accountancy firm, Menzies LLP, said, “This quarter percent rise in interest rates is yet another painful reminder that getting inflation back under control is a complex and challenging task.
“With inflation stuck at over 10% and all costs in the private sector continuing to rise faster than economists had hoped, it appears the Bank of England had little choice.
“For small and medium-sized businesses, which form the backbone of the British economy and are our core client base, this further rate increase will add to the pain they are already experiencing with higher costs eroding margins and upward pressure on all costs.
“Many businesses are banking on better times ahead and waiting for rates to fall, but for now they know they must tough it out for a while longer.
“Increased rates may have the impact of delaying investment decisions which could be counterproductive in the longer term.”