The Bank of England today increased interest rates by a quarter of one per cent to 3.75 per cent - the first rise in almost four years.
The expected increase makes the BoE the first of the world's top four central banks to raise rates since the US Federal Reserve began the global easing cycle as the world economy headed into a downturn in January 2001.
The BoE quickly followed, lowering its 6 per cent benchmark rate by a quarter point. Borrowing costs have fallen ever since, hitting their current 48-year low of 3.5 per cent in July and precipitating the biggest housing market boom since the 1980s.
But Monetary Policy Committee members have expressed concerns that house price rises are unsustainable and consumers are taking on too much debt too fast, raising the risk of a crash in spending further down the road. The MPC was only one vote short of a hike last month.