The Bank of England has raised interest rates to 2.25%, the highest level for 14 years. This will make it more expensive to borrow, which should - theoretically - encourage people to borrow less and spend less. It should also spur people to save more. However, there is also a risk that it can drag on growth, harming the economy. The bank's monetary policy committee, which sets rates, believes that the economy is already shrinking, which would officially push the UK into recession. The Bank of England has also warned that the government’s energy price freeze will push up inflation in the medium term. With energy bills rising less sharply, households will have more money to spend on other goods and services (although some people are already having to skip meals due to rising bills).