HMRC interest rates are linked to the Bank of England base rate and, as a outcome of the change, HMRC interest rates for late payment will be increased.
Several economists have challenged the need for a rate hike now, given not only the Brexit risks but also the potential damper on global growth from U.S. President Donald Trump's tariffs on imports, and counter-moves by other countries.
Though the prices remained below its estimated trajectory, the RBI has forecast retail inflation at 4.6 per cent in the second quarter of the fiscal, 4.8 per cent in the second half of the fiscal and five per cent for the first quarter of 2019-20. This time too, RBI has maintained neutral stance with an objective of achieving the medium-term target for headline inflation of 4 per cent while supporting growth.
Second straight hike by the RBI, after the first one in June.
Sterling has lost nearly 10 percent of its value since hitting a post Brexit-referendum high in April, amid worries that Britain will fail to secure a trade deal before it exits the European Union in March.
The increase means a slight increase in returns for savers, but more costs for those in debt.
Toni Smith, COO at PRIMIS and PTFS, said: "After months of speculation, the inevitable has finally happened - and only time will tell if this is the first of many increases to come or if - with Brexit on the horizon - the Bank of England may choose to reduce them once again". Unemployment is at its lowest level since the 1970s, wages are rising and inflation is above the bank's 2 per cent target, at 2.4 per cent.
Arturo Vidal transfer: Barcelona agree deal with Bayern Munich
Bayern chief executive Karl-Heinz Rummenigge added: "We celebrated great success during this time, and Arturo had a significant share in that".
The next meeting of the Monetary Policy Committee is scheduled to be held between 3rd and 5th October, 2018.
Five of the six members on the rate panel voted for a rate increase, Reuters reported.
All bets on where BoE rates are headed will be off, however, if Britain fails to get a Brexit deal, Carney has said. "The trade skirmishes evolved into tariff wars and now we are possibly at the beginning of currency wars".
"Pay rises are only just managing to outpace inflation, so this increase is likely to do little to encourage consumer confidence among the millions of Britons with variable rate mortgages".
Charlotte Nelson, Finance Expert at Moneyfacts.co.uk, said: "With the vast number of lenders increasing rates in the lead up to May's rate announcement, providers have chosen to keep rates relatively static in the run-up to this one, having already been prepped for a rise". The MPC's rate rise is a reference point for banks and building societies, meaning they can decide how much they change the rate for savers. Markets are pricing a more than 90% chance of a hike, according to the latest data.
"There is only a very remote possibility that the BOE won't hike rates on Thursday", Kathleen Brooks, research director at Capital Index said in an email.