money Interest rates – live: Bank of England hikes rate despite mortgage fears
The Bank of England has raised interest rates to a 15-year-high, piling further pressure on mortgage holders.
Rates went up to 4.25 per cent in the 11th consecutive hike, after yesterday’s shock rise in inflation outweighed fears of a banking crisis that has rocked the financial world.
The Monetary Policy Committee moved in the light of similar hikes by the Federal Reserve, Swiss central bank and Norges Bank in the hours before members were called to vote.
Stuart Gregory, managing director of Lentune Mortgage Consultancy, warned a rate rise will cause “more damage”.
“Millions of borrowers are looking at double or triple their current mortgage outgoings this year as their low rates end. No-one wins - as Landlords will need to pass this on as well,” he said.
The MPC voted just one day after the surprise jump in Consumer Prices Index inflation, from 10.1 per cent in January to 10.4 per cent in February.
Key Points
Bank of England hikes interest rates
Midday meeting expected to bring 11th rate rise running
Moore: Bank may have to act on interest rates as inflation kicks the poorest hardest
Interest rate rise ‘risks full-blown recession'
12:14 , Liam James
The Bank of England risks pushing Britain into “full-blown recession” with the interest rates rise, according to an economic expert.
Joe Nellis, Professor of Global Economy at Cranfield School of Management, reacting the Bank of England’s interest rate decision said: “The Bank of England’s decision to increase interest rates to 4.25 per cent could push the economy into a full-blown recession.
“A growth recession was inevitable prior to the rise, but the vote by the MPC will only delay any prospects for an economic recovery.Why has the Monetary Policy Committee voted to make matters worse?
“Households are already facing the biggest fall in their living standards for many decades, and the banking sector is under strain. Further interest rate rises will do more harm than good at this stage.”
Bank of England hikes interest rates
12:09 , Liam James
The Bank of England has raised interest rates to 4.25 per cent from 4 per cent.
They took the decision after official figures earlier this week showed a surprise increase in Consumer Prices Index (CPI) inflation in February and as they judged that the UK’s gross domestic product (GDP) was likely to perform stronger than previously thought.
Two members, Swati Dhingra and Silvana Tenreyro, voted against the rise, arguing that some of the recent increases to the base rate have not yet filtered through into the real economy.
Seven members of the Bank of England’s Monetary Policy Committee (MPC) voted to increase the base interest rate from 4 per cent to 4.25 per cent.
Norway raises interest rates
11:29 , Liam James
The Bank of England looks set to be the third central bank to raise interest rates today after Norway approved a 0.25 per cent hike.
Norges Bank set its key interest rate at 3 per cent and forecast a further 0.5 per cent rise by summer after a weaker-than-expected krone outweighed fears of a banking crisis.
Credit Suisse deal ‘halted banking crisis'
11:08 , Liam James
The Swiss central bank has hiked its key interest rate and insisted a government-orchestrated takeover of troubled Credit Suisse by rival bank UBS ended the financial turmoil.
In a statement, the Swiss National Bank (SNB) said it is providing large amounts of support for the deal to merge Switzerland’s biggest banks and that the late Sunday announcement by the federal government, financial regulators and the central bank “put a halt to the crisis”.
“An insolvency of Credit Suisse would have had severe consequences for national and international financial stability and for the Swiss economy,” said Thomas Jordan, chair of the Swiss central bank’s governing board. “Taking this risk would have been irresponsible.”
The Swiss central bank hiked its key interest rate by half a percentage point to counter inflation that has risen since the beginning of the year to 3.4 per cent last month.
Bank rates decision in shadow of Fed
10:04 , Liam James
The Bank of England will look to the United States in making a decision on whether to raise interest rates.
Washington’s Federal Reserve yesterday voted to increase the base rate by 0.25 percentage points, up to a 16-year high range of 4.75 per cent to 5 per cent.
The increase was smaller than had been expected before the banking crisis of recent weeks, which has been blamed in part on higher rates encouraging businesses to draw out their savings rather than relying on more expensive borrowing.
City chiefs join forces in plan for future of UK finance amid global banking troubles
08:56 , Joe Middleton
Leaders from financial service giants will join forces in a plan to secure the future of UK finance sector.
It comes as the nation awaits the Bank of England’s latest interest rate decision which is expected to rise for the 11th time in a row following yesterday’s shock rise in inflation and weeks of banking troubles.
The plan, involving Lloyd’s, JP Morgan and Barclays, among others, will identify areas of risk in the UK finance sector as well as secure innovation for sustainable finance, the City of London Corporation confirmed.
Katharine Braddick, Group Head of Strategic Policy, Barclays, said: “Recent geopolitical shocks and the shared challenge of climate change remind us that the world’s economies are interconnected. The UK can play a leading role here, in setting international standards.”
BoE raising rates today will cause ‘more damage’, says mortgage expert
08:42 , Joe Middleton
Stuart Gregory, managing director of Lentune Mortgage Consultancy, has tweeted that the BoE raising rates today will cause “more damage”.
He said: Real truth is that Bank of England raising interest rates tomorrow will cause more damage.
“Millions of borrowers are looking at double or triple their current mortgage outgoings this year as their low rates end. No-one wins - as Landlords will need to pass this on as well.”
Real truth is that Bank of England raising interest rates tomorrow will cause more damage.
Millions of borrowers are looking at double or triple their current mortgage outgoings this year as their low rates end.
No-one wins - as Landlords will need to pass this on as well.— Stuart Gregory Esq (@Mortgage_Stu) March 22, 2023
Investec Economics predicts BoE will opt for ‘wait-and-see approach'
08:25 , Joe Middleton
Investec Economics predicts the BoE will opt for a “wait-and-see approach” and keep rates at 4% while it assesses the situation.
Economist Ellie Henderson said: “The MPC will have to assess which is the lesser of two evils: the risk of inflation being higher for longer or the current threat to financial stability stemming from the rapidly evolving fears of a banking crisis.”
Bank may have to act on interest rates as inflation kicks the poorest hardest
08:14 , Joe Middleton
With food prices surging at 18 per cent, the MPC simply can’t afford not to act, writes James Moore.
Bank may have to act on interest rates as inflation kicks the poorest hardest
Bank of England is expected to increase interest rates for 11th time in a row
08:10 , Joe Middleton
The Bank of England is expected to increase interest rates for the 11th time in a row today after an unexpected resurgence in UK inflation.
Economists are pencilling in a rise to 4.25% from 4%, with the case for an increase strengthened by official figures on Wednesday revealing a surprise jump in inflation to 10.4% last month.
The noon decision also comes after the US Federal Reserve raised its key overnight interest rate by a quarter of a percentage point, despite recent turbulence in financial markets amid fears of a banking crisis.
But the Bank of England faces a difficult balancing act, weighing up the need to rein in inflation with the worries over banking woes and the possibility they may start to clamp down on lending.
