Interest rates 2022 – live: Bank of England reveals highest level since 2009
The Bank’s monetary policy committee came to the decision by majority vote
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Your support makes all the difference.The Bank of England has raised interest rates to 1.25 per cent from 1 per cent - the highest since January 2009.
The increase comes as the bank attempts to temper rising inflation and poor economic growth.
The Bank’s monetary policy committee made the decision to increase the base rate of interest for the fifth time in a row on Thursday afternoon, its highest point in 13 years.
This is the first time interest has been above 1 per cent since January 2009 and comes as the Federal Reserve raised interest by the highest margin since 1994 intensifying its drive to tame high inflation.
“In view of continuing signs of robust cost and price pressures, including the current tightness of the labour market, and the risk that those pressures become more persistent, the committee voted to increase Bank rate by 0.25 percentage points,” the committee said in a notice.
‘More radical action is needed:’ The Bank of England under pressure to raise interest rates
The Bank of England is under pressure to raise interest rates more aggressively amid concern that the quarter-percentage-point hike expected Thursday will do little to combat price increases that have pushed inflation to a 40-year high.
“It is quickly becoming apparent that more radical action is needed for the Bank of England to establish some sense of stability, because tinkering around the edges simply isn't cutting it,” Michael Hewson, chief market analyst at CMC Markets UK, said in a note to clients.
The war in Ukraine has boosted food and energy prices as the fighting disrupts shipments of oil, natural gas, grain and cooking oil. That is adding to price increases that began last year as the global economy started to recover from the Covid-19 pandemic.
The Bank of England last month forecast that inflation would accelerate to more than 10 per cent later this year after reaching 9 per cent in April, already the highest since 1982. The bank's inflation target is 2 per cent.
Bank of England policymakers have been cautious about raising interest rates too quickly, arguing that many of the inflationary pressures facing the British economy are external and beyond the bank's control.
But price increases are now becoming embedded in the economy, fueling demands for higher wages and slowing economic growth as consumers and businesses curtail purchases.
Boohoo revenue slumps in last quarter
Online fashion giant Boohoo has revealed a slump in sales over the past quarter as it failed to keep up with lockdown-boosted trading.
Revenues fell by 8 per cent to £445.7 million over the three months to 31 May, compared with the same period last year.
The retailer said UK sales nudged 1 per cent lower but it was particularly impacted by heavier declines elsewhere in Europe and in the US.
Nevertheless, Boohoo said it was optimistic as its UK sales improved month on month over the quarter and returned to net sales growth in May.
Swiss central bank unexpectedly raises interest rates
The Swiss National Bank raised its policy interest rate for the first time in 15 years, up from -0.75 per cent to -0.25 per cent.
This 50-basis-point rise makes the SNB the latest central bank to lift interest rates to fight inflation. This is the first interest rate rise by the SNB since Septenber 2007; it had kept borrowing costs at -0.75 per cent since 2015.
Thomas Jordan, chair of the SNB’s governing council, said the bank decided to tighten monetary policy to counter increased inflationary pressure.
Mr Jordan said: “The tighter monetary policy is aimed at preventing inflation from spreading more broadly to goods and services in Switzerland.
“It cannot be ruled out that further increases in the SNB policy rate will be necessary in the foreseeable future to stabilise inflation in the range consistent with price stability over the medium term.
To ensure appropriate monetary conditions, we are also willing to be active in the foreign exchange market as necessary.”
Why are interest rate increasing?
The Bank of England is expected to hike interest rates for the fifth time in a row, but experts warn that any hesitation could help push the price of petrol higher for squeezed British drivers.
“The Bank of England faces a stern test of its mettle at the next interest rate decision, and any hesitation is likely to result in the pound being punished on the currency markets,” said Laith Khalaf, head of investment analysis, AJ Bell.
Such a drop would mean that the price of petrol and diesel, and other imports that the UK pays for in dollars, would rise.
This month the average price of filing a family car topped £100 for the first time.
Any further jump is unlikely to be welcomed by drivers.
Read the full story here
How do interest rates affect you?
Bank of England governor Andrew Bailey had warned before May’s announcement that the BoE must walk a “very tight line” between cooling inflation and triggering a recession.
Consumer confidence fell last month and retail sales came in lower than expected, due to the impact of soaring energy bills, food prices and fuel costs.
Below is a quick easy guide to how the latest interest rate change will affect you:
All you need to know about interest rates and how they affect you
Interest rates are already at their highest level in 13 years
Biggest rise in US interest rates since 1994
The Federal Reserve on Wednesday intensified its drive to tame high inflation by raising its key interest rate by three-quarters of a point — its largest hike in nearly three decades — and signaling more large rate increases to come that would raise the risk of another recession.
The move the Fed announced after its latest policy meeting will increase its benchmark short-term rate, which affects many consumer and business loans, to a range of 1.5 per cent to 1.75 per cent.
The central bank is ramping up its drive to tighten credit and slow growth with inflation having reached a four-decade high of 8.6 per cent, spreading to more areas of the economy and showing no sign of slowing. Americans are also starting to expect high inflation to last longer than they had before. This sentiment could embed an inflationary psychology in the economy that would make it harder to bring inflation back to the Fed's 2 per cent target.
Read the full story here
Bank of England to hike interest rate to highest level in 13 years
The Bank of England is expected to hike interest rates again on Thursday as it struggles to temper rising inflation and poor economic growth.
The Bank’s monetary policy committee is expected to hike the base rate of interest for the fifth time in a row - to a rate of 1.25 per cent. At its May meeting, the Bank increased the base rate to 1 per cent, its highest point in 13 years.
If they do go ahead with another raise on Thursday it would be the first time since January 2009 that the rate was higher than 1 per cent.
Read the full story from our reporter, Holly Bancroft:
Bank of England poised to hike interest rates to 1.25%
Base rate of interest currently stands at 1 per cent - its highest point in 13 years
Welcome
Good morning and welcome to The Independent’s interest rates live blog.
The Bank of England is poised to hike interest rates to 1.25 per cent - the highest level in 13 years. Follow our live blog for the latest updates, and news leading up to and following the announcement.
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