Breaking: Bank of England increases interest rates

Breaking: Bank of England increases interest rates to 0.75%.

The Bank of England’s Monetary Policy Committee (MPC) voted in favour of increasing the interest rate from 0.5 per cent 0.75 per cent. With the ongoing war in Ukraine, further increases could be seen this year.

Eight members of the committee voted in favour of the move. Since the coronavirus pandemic began in March 2020 this is the third time the base rate has increased. The move will help savers.

According to The Guardian, the minutes from the Monetary Policy Committee meeting said: “Given the current tightness of the labour market, continuing signs of robust domestic cost and price pressures, and the risk that those pressures would persist, most members of the Committee judged that a 0.25 percentage point increase in Bank Rate was warranted at this meeting.

“UK activity had been somewhat stronger than had been expected at the time of the February Report and there had been indications that the current tightening in the labour market might not reverse direction as quickly as had been expected.

“The effects of Russia’s invasion of Ukraine would likely accentuate both the peak in inflation and the adverse impact on activity by intensifying the squeeze on household incomes.

“Monetary policy should be tightened at this meeting in order to reduce the risk that recent trends in nominal pay growth, domestic pricing, and inflation expectations strengthened and became embedded, and thereby to help to ensure inflation was at target sustainably in the medium term.”

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