Bank of England hikes interest rate for the first time since Iran war, warns inflation will near 5%
Governor Andrew Bailey said the move is aimed at curbing inflation pressure from higher energy prices and warned more increases may follow if the conflict continues.
- 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.
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The entity's monetary policy committee decided to raise the price of money by eight votes to one, after the two-day meeting that coincided with the mid-term elections in the United States.
The Bank of England (BOE), the UK's central bank, raised its base interest rate by 0.25 percentage points from 3.75% to 4% at its Monetary Policy Board meeting on the 5th. This marks the first interest rate hike in the UK in three years and three months, since August 2023. According to Sky News on the 5th, the Bank of England [held] the decision with the unanimous approval of all nine members of its Monetary Policy Board.
The Bank of England (BoE) raised its benchmark interest rate by 0.25 percentage point to 4% per year in the first interest increase promoted by the British central bank since August 2023, in line with market expectations. The monetary policy committee highlighted the acceleration of inflation due to high energy prices and strong data on the country's economy. The decision to raise interest rates by 0.25 percentage point was not unanimous, with e…
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