The Bank of England is once again expected to raise interest rates in the UK, which will be the 12th time in a row it has done so.

Policymakers at the Bank of England are expected to raise interest from 4.25% to 4.5% on Thursday (May 11), representing a 0.25 percentage point increase.

This means it will be more expensive to borrow which will push banks to lift saving rates.

It comes as UK Consumer Prices Index (CPI) inflation remained firmly in double digits in March, squeezing household budgets and proving more stubborn than expected.

With this continued economic strain some may wonder why interest rates are continually being raised.

Isle of Wight County Press: The Bank of England meets eight times a year to discuss interest ratesThe Bank of England meets eight times a year to discuss interest rates (Image: PA)

Why are the interest rates being raised?

The simple fact of it is that interest rates are going up to bring down the UK's inflation, which currently stands above 10%.

As the Bank of England itself states: "Low and stable inflation is vital so that money keeps its value and people can plan for the future with confidence. It’s fundamental for a healthy economy."

The current UK target is to have inflation at 2%, and higher interest rates make it more expensive for people to borrow money so people are encouraged to save.

Therefore, it means people tend to spend less.

The Bank of England adds: "If people spend less on goods and services overall, the prices of those things tend to rise more slowly. Slower price rises mean a lower rate of inflation."

When will interest rates go down?

Despite this latest expected increase, it is anticipated that outside of one or two more rises it may be coming to an end.

BBC News reports: "The Bank will be keen not to dampen the economy, which has shown little sign of growth.

"The peak would be lower than initial predictions after the turmoil of last year's mini-budget."

Ellie Henderson, from Investec Economics, said the “clock is ticking” on the Bank’s monetary policy tightening cycle, and an increase on Thursday could be the last.

She said: “As things stand and considering the sharp downward influences on inflation in the coming months, namely from energy but also from cooling food and goods price inflation, we suspect that this could be the last hike by the Bank of England in this cycle.”

The Monetary Policy Committee meets eight times a year (roughly every six weeks) meaning the interest rates could go down within a few months.