Interest rates rise

The Bank of England (BoE) has raised interest rates from 0.25% to 0.5%, the first rate rise in ten years.

In explaining the reasons behind the rise, the BoE monetary policy summary states:

'CPI inflation rose to 3.0% in September.  The MPC still expects inflation to peak above 3.0% in October, as the past depreciation of sterling and recent increases in energy prices continue to pass through to consumer prices.  The effects of rising import prices on inflation diminish over the next few years, and domestic inflationary pressures gradually pick up as spare capacity is absorbed and wage growth recovers.  On balance, inflation is expected to fall back over the next year and, conditioned on the gently rising path of Bank Rate implied by current market yields, to approach the 2% target by the end of the forecast period.'

Mark Carney, the Governor of the BoE, suggested that many mortgages, credit cards and loans would not be impacted in the short term by the interest rate rise. He also indicated that two more interest rate rises may be required by 2020 to help bring inflation back to the BoE's target.

Rain Newton-Smith, Chief Economist at the Confederation of British Industry (CBI), said:

'The decision to raise interest rates comes as no surprise, given the recent signals from the Bank and several MPC members, signalling their intention to vote for a change of course.

'Businesses will be watching the reaction of consumers closely, and what's important is the pace of any future rises. As rates creep up, it'll be important to keep an eye on the impact for those at the lower end of the income scale.'

Address

Malcolm Piper & Company Limited, Kingsnorth House, Blenheim Way , Birmingham B44 8LS

Contact us today!

0121 382 1000

© 2024 Malcolm Piper & Company Limited. All rights reserved.
Registered in England and Wales. Company registered number 07678988. VAT number 114 8037 37
Registered office: Malcolm Piper & Company Limited, Kingsnorth House, Blenheim Way , Birmingham B44 8LS
Registered with the Institute of Chartered Accountants in England and Wales, number C002905991

We use cookies on this website, you can find more information about cookies here.