The Bank of England has raised interest rates by 0.25% to 4.5% as expected today, after a majority of the Bank’s Monetary Policy Committee (MPC), headed by Governor Andrew Bailey (pictured) voted for the increase again. This increase is the 12th successive rise, taking the rate to its highest level in almost 15 years.
The Bank is reacting to a stubborn inflation figure, which remains above 10% despite all the recent interest rate increases. All eyes will now be on the banks and building societies to see if they will respond to this increase, and raise mortgage rates in response.
Mortgage rates have fallen slightly recently after the chaos last year caused by the Mini-Budget in September. Since December 2021, the Bank has increased the interest rate from 0.1% to 4.5%.
The MPC says: “Higher interest rates mean higher costs for some people. We know that is not easy when there is already a lot of pressure on their finances.
“Our aim is to bring back low and stable inflation,” it says. “We expect inflation to then meet our 2% target by late 2024.”
“Low and stable inflation is vital for a healthy economy. An economy in which households and businesses can plan for the future with confidence and money holds its value.
“We expect inflation to fall quickly this year. We expect inflation to then meet our 2% target by late 2024. That doesn’t mean that prices will fall, but they will stop increasing so quickly.”
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