The Bank of England raised interest rates for the 14th time in a row today, by 0.25%. The Bank’s Monetary Policy Committee voted by a 6-3 majority in favour of the rate rise.
At 5.25%, interest rates are at a “fresh 15-year high”, said The Times Money Mentor. Monthly repayments will increase for “around 1.4 million mortgage holders on tracker deals” as a result, which may have a knock-on impact for some tenants in privately rented accommodation.
But the rise does “mark a smaller increase than July’s dramatic rise” from 4.5% to 5%, suggesting “price rises have begun to ease”, said the BBC. And “banks may offer greater returns on savings accounts”.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
The consumer prices index (CPI) dropped to 7.9% in the year to June, a fall that was “larger than expected”, said The Times Money Mentor. The Bank of England (BoE) hopes that raising rates will help to further ease inflation, but the CPI remains “well above most industrial nations”, said The Guardian, and is “almost four times the Bank’s 2% target”.
Rishi Sunak told LBC yesterday that there is “light at the end of the tunnel” for many people in the UK, but admitted that progress on his promise to halve inflation by the end of the year was not moving as quickly as he would like. He said he was making “difficult but responsible decisions” in order to “bring down inflation for everyone”.
In the US and the eurozone, “hopes are rising that interest rates are close to a peak”, said the Financial Times, while in the UK, financial markets are expecting further 0.25% increases before the end of the year.
Announcing the increase, the BoE said it expects inflation to drop “markedly” this year, and that its target of 2% could be met by early 2025.
Continue reading for free
We hope you're enjoying The Week's refreshingly open-minded journalism.
Subscribed to The Week? Register your account with the same email as your subscription.
-
Why is the government on the brink of a shutdown?Today's Big Question GOP infighting is bringing the country to a standstill, but even Republicans aren't entirely sure why
-
Today’s political cartoons — September 29, 2023
Friday's cartoons - Biden's dog bite incident, the government shutdown and more
-
'A teetering democracy of gerontocrats?'
Instant opinion Opinion, comment and editorials of the day
-
Inflation vs. deflation: which is worse for national economies?
Today's Big Question Lower prices may be good news for households but prolonged deflation is ‘terrible for the economy’
-
Interest rates: more ‘trauma’ for households
Talking Point Latest hike will cause ‘plenty of pain for borrowers’
-
Is there a 'richcession' and could it help the economy?
Talking Point The wealthy may temporarily not be getting richer
-
With inflation on the mend, what will the Fed do next?
Talking Point A better-than-expected CPI report has some wondering if the central bank should press pause on another interest rate increase
-
Five options to get the UK back to 2% inflation
feature Some economists believe alternatives to raising interest rates are in the country’s best interests
-
What’s causing China’s deflation crisis?
Today's Big Question Stalling post-pandemic recovery and weakening demand for exports could lead to growth spiral
-
Why aren’t soaring interest rates bringing down inflation?
Today's Big Question PM pins blame for stubborn inflation on fixed-rate mortgages, but economists say the picture is more nuanced
-
Inflation crisis: is a recession the only answer?
Talking Point Experts suggest sharp slowdown may be necessary to avoid economic spiral
