Published 11 minutes ago • loading... • Updated 11 minutes ago
Bank of England hikes for the first time since the Iran war, lifting interest rate to 4%
The widely expected move lifts borrowing costs for households and businesses while boosting savers, as policymakers respond to rising inflation and energy prices.
The Bank of England raised its key interest rate by 25 basis points to 4% on Thursday, marking the first increase in over three years.
Rising inflation driven by energy costs from the Iran war prompted policymakers to act, as the Consumer Prices Index remains elevated and expected to climb further.
The rise immediately impacts 510,000 tracker mortgage-holders, while 470,000 variable-rate mortgage holders await individual lender reactions to determine their new payments.
Lenders have already "priced in" the rise, with average two-year fixed rates at 5.96% and five-year rates at 5.99%, though savers may see improved returns.
Chris Cheverall, head of UK at CMC Markets, said the focus is now "what follows after" reaching 4%, as policymakers balance high inflation against weakened economic growth.