UK interest rate rise predicted as cost of living crisis deepens
Britons are braced for the Bank of England to increase interest rates on Thursday as the central bank seeks to tackle price pressures that have pushed annual inflation to a 30-year high of 5.4%.
Most City economists said the majority of members on the Bank’s rate-setting committee would increase the base rate from 0.25% to 0.5%, with the likelihood that at least two more increases would follow during 2022.
On the eve of the Bank’s decision, 29 economists from 45 respondents to a survey by Reuters predicted that the monetary policy committee (MPC) would go ahead with a rise, while 16 forecast that rates were likely to remain on hold.
High-street lenders are expected to increase the cost of variable-rate mortgages immediately after the vote, adding to the cost of living crisis facing many of those borrowing to buy a home. Rents are also likely to increase as landlords pass on the cost of borrowing to tenants, though savers will enjoy a long-awaited rise in the interest paid on deposit accounts.
A separate survey by the data compiler IHS Markit found that 49% of households – a record high – believe that Threadneedle Street policymakers will impose at least one rate rise in the next three months.
IHS Markit said it was clear that the MPC’s surprise vote in December to increase the base rate from 0.1% to 0.25%, and to signal three rate rises to 1% this year, had filtered through to the public.
Chris Williamson, the chief business economist at IHS Markit, said: “UK households have grown increasingly certain of the Bank of England hiking interest rates for a second meeting in succession, with expectations of tighter policy having spiked higher since last October as inflation worries took hold.”
He said recent surveys of business
Read more on theguardian.com
