Markets are betting on the Bank of England doubling interest rates by the end of this year.
Borrowers and investors are now bracing themselves for the biggest increase in 27 years at this week's meeting of the bank's monetary policy committee.
The Telegraph says officials on Threadneedle Street are expected to vote for a rare 0.5% increase to interest rates on Thursday as the Bank comes under pressure from Conservative MPs to tackle rampant inflation.
Worse-than-expected inflation figures and strong signals from Governor Andrew Bailey have emboldened traders to bet on the bank boosting rates to 1.75% at Thursday's meeting.
The sixth back-to-back increase will lift rates to their highest level since early 2009 - pushing up mortgage rates for millions of homeowners and borrowing costs for businesses.
Investors are now bracing for interest rates to surge above 2.5% by the end of 2022 - up from 1.25% currently.
The last time the Bank made such a big increase in interest rates at a meeting was in 1995 - before its independence two years later.
0.5% hike expected
Steffan Ball, an economist at Goldman Sachs, told the Telegrph: "Given the strong inflation data and likely sizeable upward revision to the Bank of England's growth forecast, we expect all monetary policy committee members to vote for a 0 5% hike on Thursday."
Earlier this month Mr Bailey said a double rate rise is "on the table" after inflation hit a 40-year high of 9.4% in June.
The bank has come under attack from Conservative leadership hopefuls, with frontrunner Liz Truss vowing to look again at its mandate after failing to prevent the price surge.
However, officials face a balancing act as the risk of recession grows and rate rises dampen demand.
Forecasters have predicted that the Bank of England's rate-setters will need to back more increases in borrowing costs if Liz Truss becomes Prime Minister.
Her plan for more than £30billion of tax cuts is expected to stoke inflation and growth, forcing the bank into more rate rises to cool demand.