What is the Bank of England and why does it change interest rates?

The Bank of England has put up its main interest rate from 4% to 4.25% as it continues to try and slow rising prices.

This is the 11th consecutive rise since November 2021.

The Bank of England is the UK's central bank. It is independent from the government.

It describes its key job as ensuring the UK has secure banknotes, stable prices, a safe banking sector and a resilient financial system.

The bank has a target to keep inflation - the official measure of how quickly prices are rising - at 2%.

However, prices are currently rising at about five times that level.

The Bank's traditional response to rising inflation is to increase the UK's official interest rate.

This influences the saving and borrowing rates charged by high street banks to individuals and businesses.

In March, the Bank raised interest rates for the 11th time in a row, increasing them to 4.25%, their highest level in more than 14 years.

Putting up interest rates can mean people are more likely to save money and less likely to borrow it.

In theory, this means they have less money to spend so will buy fewer things, which should help stop prices rising as quickly.

It also makes it harder for firms to borrow money and expand.

Alternatively, if the Bank cuts interest rates, there's less incentive to save money and borrowing becomes cheaper.

This can encourage businesses to borrow and people to go out and spend more, boosting the economy.

After previously meeting every month to decide interest rate policy, the Bank's monetary policy committee (MPC) now convenes eight times a year to set rates.

After a series of preliminary meetings, the committee's nine members vote on whether to increase, reduce or hold interest rates, and their collective decision is published at noon.

Minutes of the meeting where the decision was taken are also published.

Four times a year the Bank also publishes a Monetary Policy Report (MPC) which sets out the economic analysis and inflation projections that the MPC uses to make its interest rate decisions.

The Bank of England also buys and sells government bonds.

Bonds are a bit like an "I owe you" from the government, which uses them to raise money to help meet its spending commitments.

In the period from the 2009 financial crisis until 2021, the Bank of England bought £875bn of government bonds. This was done through a process called quantitative easing which was designed to reduce overall government borrowing costs, lower interest rates and stimulate spending in the economy.

The Bank announced an emergency bond-buying programme to try to stabilise the economy after September's mini-budget caused turmoil on financial markets.

Once that intervention ended, the Bank said it would go ahead with a plan - first announced in August 2022 - to sell off some of the government bonds it holds.

The Bank also:

Andrew Bailey took over as governor in 2019, having previously worked at the Bank for more than 30 years.

He was the Bank's chief cashier from January 2004 until April 2011, which meant his signature appeared on billions of UK banknotes.

As well as being responsible for overseeing the Bank's main responsibilities, the governor also chairs three important committees that help it work towards its targets: the Monetary Policy Committee, the Financial Policy Committee and the Prudential Regulation Authority.