Bank of England increased UK interest rates to 1.25 per cent

BANK OF ENGLAND increased UK interest rates to 1.25 per cent following a meeting of the Monetary Policy Committee (MPC) held on June 15 but not announced until the following day.

The MCP sets monetary policy to meet the 2 per cent inflation target but in a way that helps to sustain growth and employment.

Members of the Committee voted by a majority of 6-3 to increase Bank Rate by 0.25 percentage points but those members in the minority preferred to increase Bank Rate by 0.5 percentage points, to 1.5 per cent.

It confirmed that its central projections in the May Monetary Policy Report, UK GDP growth was expected to slow sharply over the first half of the forecast period and, although the labour market was expected to tighten slightly further in the near term, the unemployment rate was projected to rise to 5.5 per cent in three years’ time.

CPI inflation was expected to average slightly over 10 per cent at its peak in the fourth quarter of 2022 and the MPC forecasts that inflation would drop to 2 per cent within two years.

The base rate is the interest rate the Bank of England charges other banks and lenders when they borrow money but low base rates doesn’t benefit consumer borrowing as banks and other lenders charge around 25 per cent interest on credit cards.

Any increase in the bank rate is generally reflected in an increase in loan and credit card interest rates.

Thank you for reading ‘Bank of England increased UK interest rates to 1.25 per cent’ and remember that all articles produced by Euro Weekly News may be accessed free of charge.