By Julia Cameron • 23 March 2023 • 10:58
Photo by lazyllama at Shutterstock
The interest rate increase is expected to be announced this afternoon and it is thought that it will be a 0.25 percentage point which will take rates to 4.25%.
The raising of the Bank rate is to reduce the risk of higher inflation, but it will put pressure on homeowners with mortgages who are already struggling because of the cost of living crisis.
Economists hoped that the Bank of England would put a hold on interest rate rises, but inflation rose from 10.1per cent in February to 10.4 per cent. Inflation was the highest it has been in 41 years in October last year when it reached 11.1 per cent.
The inflation rise is thought to be the fault of one-off circumstances such as vegetable shortages which were caused by weather conditions in Africa and Spain.
The European Bank, last week, also hiked its three principal interest rates by 50 basis points and this is despite the turmoil in the market being caused by the Credit Suisse Bank and the collapse of the Silicon Valley Bank.
ING Economist James Smith said he thought that the latest interest rise by the Bank of England would be the last. He said “Assuming the broader inflation data continues to point to an easing in the pipeline pressures, then we suspect the committee will be comfortable with pausing by the time of the next meeting in May.”
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Julia is an ex-pat writer from Brighton living in a small village close to the Andalucian town of Priego de Cordoba. When she's not working she enjoys reading, tracing her ancestry and swimming. She especially loves the summer when she can get down to the coast and chill on the beach.
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