As inflation remains stubbornly high, buoyed, in part, by strong wage growth, the Bank of England raised interest rates by a quarter point Thursday.

This is the 14th consecutive hike in interest rates since the central bank began raising rates in December 2021, bringing the main cost of borrowing for commercial banks in the UK to 5.25%.

The bank made a split decision. A quarter point hike was supported by six members of the monetary policy committee, a half point hike by two, and a pause by one.

According to the Bank of England, recent data outturns have been mixed. There are, however, some key indicators, notably wage growth, which indicate that some of the risks associated with more persistent inflationary pressures have begun to crystallize.”

More than 2 million UK mortgage holders are facing steep increases in their mortgage bills this year and next due to refinancing.

As of Thursday, the average two-year fixed-rate mortgage cost 6.85%, compared with 3.95% last August, according to comparison website Moneyfacts.

Borrowers may experience more pain in the future.

The Bank of England hinted that it might pause its rate hikes like the Federal Reserve and the European Central Bank.

On Thursday, central bank governor Andrew Bailey said that “depending on what the evidence on the economy indicates, we might need to raise interest rates again.”

As the central bank tries to curb rising prices, financial markets were predicting the Bank of England’s benchmark interest rate would peak at 5.75% by the end of the year.

“Probably less than half” of previous rate hikes have passed through to the real economy, according to Kallum Pickering, senior economist at Berenberg.

In other words, while policymakers stop raising the bank rate, the UK will continue to experience de facto policy tightening for many months to come.

Although inflation has eased in recent months, it remains stubbornly high. In June, consumer price inflation was 7.9%, down from its 41-year high of 11% in October 2022, but still higher than the Bank of England’s target rate of 2%, and still higher than the Group of Seven rich nations.

Last month, core inflation – which excludes volatile food and energy costs – fell to 6.9% from 7.1% in May.

In a statement on Thursday, Bailey said it was evident that tighter monetary policy had helped bring inflation down, and that he expected the rate of price rises to “continue to fall.”