Interest rates expected to rise for first time in over three years
Most analysts are predicting an increase from 3.75% to 4%, the first increase in more than three years.
The Bank of England is set to increase interest rates for the first time in over three years on Thursday, according to expectations from policymakers. The benchmark rate is predicted to rise from 3.75% to 4%, despite it having fallen from a 2023-24 peak of 5.25%. This move will likely lead to higher borrowing costs for individuals and businesses, while providing a boost to savers.
The Bank of England's Monetary Policy Committee (MPC) left the interest rate unchanged at its six previous meetings, but rising inflation caused by the cost of petrol and diesel has prompted the decision. The Bank will reveal the decision at 12:00 GMT on Thursday, and the MPC's future direction of interest rates will also be closely monitored.
Analysts suggest that the Bank's decision is more focused on the subsequent steps following the 4% rate, as inflation is still above the 2% target. The ongoing impact of the Iran war on energy and fuel costs has also contributed to the increase in the UK inflation rate. Millions of domestic energy customers are anticipating a significant price rise in January.
The Bank of England's base rate influences the interest rates charged by other banks and building societies, impacting mortgages, savings, and loans.
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