New Bank of England interest rates rise impact on future mortgage payments and soaring inflation
03.02.2023 - 12:43
/ dailyrecord.co.uk
The Bank of England has hiked interest rates for the tenth time in a row, putting even more pressure on households amid the ongoing cost of living crisis. The Bank said the decision on Thursday was taken to help keep inflation under control and indicated that it might be nearing the end of its successive interest rate rises.
The Bank also forecast that an expected recession will be shorter and shallower than previously thought. It came as Chancellor Jeremy Hunt said that he would try to "support" Governor Andrew Bailey and his team's efforts to lower inflation in next month's Spring budget, due to take place on March 15.
Decision makers on the Bank's Monetary Policy Committee (MPC) opted to hike the base rate from 3.5% to 4%, to help bring double-digit inflation under control. Inflation has already started to come down off the highs of late last year, and the Bank said it expects the measure to fall quickly in 2023.
But what does this all mean for inflation and homeowners? Below is a quick overview of the impact of the new interest rats rise.
It’s worth noting that the impact on credit cards will be negligible due to the current high interest rates already implemented by most lenders.
The Bank of England is tasked with keeping inflation under control. At the moment inflation is not under control, it hit 10.5% in the year to December.
The main tool that the MPC has to combat inflation is its authority to decide the base interest rate. If it raises rates, it is generally seen as putting downward pressure on inflation, if it slashes the rate then inflation should often rise.
In simple terms which skip a few steps, the base rate is used by normal banks to help them decide what interest rate to charge borrowers, and also what to pay
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