Governor Mervyn King warned that the recent rise to 4.75 per cent may not be the only one as inflation begins to approach three per cent.
Mr King said that “overall the central view described in this inflation report is one of inflation rising further in the near term, before gradually returning towards the target over the forecast period”.
A rise in the interest rates even further will add to the monthly debt repayments that anyone with a linked loan or mortgage holds.
Justifying the rise in the rate, Mr King said that he and the monetary policy committee (MPC) needed to keep inflation on track, but added that further action “might be necessary in future”.
Howard Archer, chief UK and European economist at research firm Global Insight, commented that there were major uncertainties over the future, meaning that homeowners should prepare themselves for further debt.