The Bank of England today raised interest rates to 4% - a 14-year high and the 10th consecutive raise - making rates their highest since 2008 as double-digit inflation continues to bite.
The Bank of England today raised the base rate from 3.5% to 4% – a 14-year high and the 10th consecutive raise – making rates their highest since 2008 as double-digit inflation continues to bite.
While most borrowers are already fixed into mortgage deals some 2.2 million are thought to be exposed to rate rises and more than a million are forecast to renew fixed-rate deals later this year. Meanwhile Nationwide reported yesterday that house prices in the UK fell again in January, sliding for the fifth month in a row.
The Bank of England says that while global consumer price inflation remains high it is likely to have peaked in the UK as well as in other advanced economies. “Many central banks have continued to tighten monetary policy, although market pricing indicates reductions in policy rates further ahead.
“Given the lags in monetary policy transmission, the increases in Bank Rate since December 2021 are expected to have an increasing impact on the economy in the coming quarters.
“The Committee has voted to increase Bank Rate by 0.5 percentage points, to 4%, at this meeting. Headline CPI inflation has begun to edge back and is likely to fall sharply over the rest of the year as a result of past movements in energy and other goods prices.
“However, the labour market remains tight, and domestic price and wage pressures have been stronger than expected, suggesting risks of greater persistence in underlying inflation.”
“Looking further ahead, the MPC will adjust Bank Rate as necessary to return inflation to the 2% target sustainably in the medium term, in line with its remit.”
[Estate Agency Today]