Interest rates are going up by 0.25% to 6%.

The widely expected decision from the Bank of England's Monetary Policy Committee (MPC) is the fourth increase in recent months.

If passed on in full to home owners, a 0.25% increase will typically mean an extra �12 a month on interest repayments for an average �60,000 loan.

There had been growing concern about rising consumer confidence and the steep climb in house prices.

British Retail Consortium figures show shop sales were 4% higher in January than a year earlier.

And latest figures show house prices have been rising at 16% a year.

The MPC fears that these factors could indicate rising inflation, and is using interest rates to counter the threat.

The Bank of England's short-term lending rate - or base rate - sets the trend for interest rates throughout the economy.

So a rise to 6% will trigger similar rises across the board in, for example, mortgage, credit-card and hire-purchase rates.

"The interest rate weapon is just about as blunt as you can get," says Jeremy Hawkins, chief economist at the Bank of America in London.

"What it really does come down to is the fact that fiscal policy in the UK is almost certainly too loose at the moment. Had that taken out some of the excess demand in the economy, interest rates would not have had to go up as far as they have."

Like many analysts, he expects rates to continue rising over the next few months, possibly to 6.5% - still well below the 7.5% peak in mid-1998.

Business and union leaders, however, have argued that rate increases could derail the economic recovery.

''This fourth rate rise in six months will inflict severe pressure on UK business," said Dr Ian Peters of the British Chambers of Commerce.

"The Monetary Policy Committee appears to be repeating its mistake of 1998 by squeezing growth too hard. With intense competition and an overvalued pound keeping inflation at bay, now is not the time to slam on the brakes."

The AEEU engineering union said the rise could choke exports in the Midlands and the north.

"Another rise is like pouring petrol on to the fire," said general secretary Sir Ken Jackson.

And small businesses - which employ 10 million people - are worried that high lending rates are hitting their profitability.

"Even though interest rates may be at 6%, they may still pay 4% or 5% above that level on the instigation of the bank manager because small businesses are seen as riskier," says Stephen Alambritis of the Federation of Small Businesses.

"Why should small businesses pay more because there is inflation or because there is a property boom or because consumers are getting out of hand?

"There should be a two-tier interest rate system, one to clamp down on consumers and a lower interest-rate level for business borrowing."

So who will lose and who will gain with this latest increase?

WINNERS		LOSERS
Savers - Returns on savings and building society accounts have been very low recently. Even tax free schemes such as Tessas and some Isas performed disappointingly. The government has been encouraging people to save - higher rates make saving more attractive.		Businesses - Higher rates increase their costs, which can make them less competitive. It also costs more to borrow money and to invest. Some companies argue that high interest rates keep the pound strong, which makes it harder for them to export.
Pensioners - Many get a regular income from annuities, but this can depend greatly on interest rate levels. Higher rates can mean higher returns.		Home owners - Although they have enjoyed low rates for some time, the fairly rapid rise means the average interest repayments on a �60,000 loan have gone up �50 a month since last August.