By Fergal MacErlean •
Updated: 05 May 2022 • 14:44
The Bank of England raised interest rates to one per cent on Thursday, May 5.
The result of the Bank of England’s latest rate-setting Monetary Policy Committee (MPC) meeting announcement is a rise of 0.25 per cent
The fourth consecutive increase is the highest level for borrowing costs since 2009.
And the central bank warned inflation is set to peak at more than 10 per cent this year as it issued a recession warning.
The Bank’s Monetary Policy Committee said: “Consumer Price Index inflation is expected to rise further over the remainder of the year, to just over 9 per cent in 2022 Q2 and averaging slightly over 10 per cent at its peak in 2022 Q4.
“The majority of that further increase reflects higher household energy prices following the large rise in the Ofgem price cap in April and projected additional large increase in October.
“The price cap mechanism means that it takes some time for increases in wholesale gas and electricity prices, and their respective futures curves, to be reflected in retail energy prices.
“Given the operation of the price cap, consumer price inflation is likely to peak later in the United Kingdom than in many other economies, and may therefore fall back later.
“The expected rise in CPI inflation also reflects higher food, core goods and services prices.”
Original: 5 May 2022 at 11:04
If the Bank of England does implement the change it would mean higher mortgage payments for more than two million homeowners.
The interest rate is predicted to rise to 1 per cent from 0.75 per cent.
The result of the Bank of England’s latest rate-setting Monetary Policy Committee (MPC) meeting announcement is due at midday on Thursday, May 5.
The MPC is widely expected to raise base rate by 0.25 per cent but some analysts are calling for a 0.5 per cent hike.
If the rate increase happens it would be its fourth consecutive rise. And it would mean higher mortgage payments for more than two million home owners with variable rate mortgages.
America’s central bank has announced the biggest interest rate rise in more than 20 years as it seeks to fight inflation.
The Federal Reserve put up its benchmark rate by 0.5 percentage points to a range between 0.75 per cent and 1 per cent.
It was the biggest hike in the US since 2000 and signals the level of conern among central bankers about the soaring cost of living.
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Originally from Dublin, Fergal is based on the eastern Costa del Sol and is a web reporter for The Euro Weekly News covering international and Spanish national news.
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