The Bank of England has announced an increase in interest rates to 0.75%, marking the highest level since 2009. The decision comes as the UK economy shows signs of recovery, with unemployment rates at a record low and inflation hovering around the Bank’s target of 2%.
The move was widely expected by economists, who have been predicting a rate hike for some time. The Bank’s Monetary Policy Committee (MPC) voted unanimously in favour of the increase, citing the need to keep inflation in check and maintain financial stability.
The decision is likely to have an impact on borrowers, particularly those with variable rate mortgages. The increase in interest rates will mean higher monthly repayments for those with such mortgages, although the impact is expected to be relatively small.
Savers, on the other hand, are likely to benefit from the rate hike, with higher returns on their savings accounts. However, the increase is unlikely to be significant enough to make a major difference to most savers.
The Bank’s decision to raise interest rates comes amid a period of uncertainty for the UK economy, with Brexit negotiations ongoing and the possibility of a no-deal scenario still looming. However, the Bank’s Governor, Mark Carney, has said that the decision was based on the current economic data and not on any assumptions about the outcome of Brexit.
The Bank’s decision has been welcomed by some, who see it as a sign of confidence in the UK economy. However, others have expressed concern that the rate hike could put a strain on households already struggling with high levels of debt.
Overall, the Bank’s decision to raise interest rates is a reflection of the improving economic conditions in the UK. While there are still challenges ahead, the move is a positive step towards ensuring financial stability and keeping inflation under control.