Bank of England raises interest rates for first time in 10 years

The Bank of England (BoE) has raised interest rates from 0.25% to 0.5% - marking the first rate rise in ten years.

03 Nov 2017

The Bank of England (BoE) has raised interest rates from 0.25% to 0.5% – marking the first rate rise in ten years.

As a result, many consumers are likely to face higher mortgage interest repayments. Savers and retirees, however, potentially stand to gain from the rise: savings rates are likely to improve.

The Monetary Policy Committee (MPC) stated that the decision to increase rates was made as a result of rising inflation, low unemployment levels and strong global economic growth. Inflation currently stands at 2.8% – significantly higher than the BoE’s 2% target.

In a statement, the BoE said: ‘The MPC . . . judges it appropriate to tighten modestly the stance of monetary policy in order to return inflation sustainably to the target. All members agree that any future increases in the bank rate will be at a gradual pace and to a limited extent.’

Mark Carney, the Governor of the BoE, suggested that many mortgages, credit cards and loans would not be impacted in the short-term. He also indicated that two more interest rate rises may be required by 2020 to help bring inflation back to the BoE’s target.

Commenting on the rise, Rain Newton-Smith, Chief Economist at the Confederation of British Industry (CBI), said: ‘The decision to raise interest rates comes as no surprise, given the recent signals from the Bank and several MPC members, signalling their intention to vote for a change of course.

‘Businesses will be watching the reaction of consumers closely, and what’s important is the pace of any future rises. As rates creep up, it’ll be important to keep an eye on the impact for those at the lower end of the income scale.’

The Federation of Small Businesses (FSB), however, did not welcome the increase. Mike Cherry, its National Chairman, stated that the rise ‘will mean more cost pressures for small firms’.

Quick Links

Home | Contact us | Accessibility | Disclaimer | Help | Site map |

© 2019 Blue Spire Limited. All rights reserved.

We use cookies on this website, you can find more information about cookies here.

Contact Chichester Office

Tel: +44 (0)1243 781234
Fax: +44 (0)1243 791770

Contact Brighton Office

Tel: +44 (0)1273 739533
Fax: +44 (0)1273 732844

Chichester Address
Cawley Priory, South Pallant, Chichester, West Sussex PO19 1SY

Brighton Address
5th Floor Intergen House, 65-67 Western Road, Hove, East Sussex BN3 2JQ

Blue Spire Limited is Registered to carry out audit work in the UK and Ireland and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales C004152645. Professional indemnity insurance is provided by Royal & Sun Alliance Insurance Plc 9th Floor, One Plantation Place, 30 Fenchurch Street, London, EC3M 3BD and its territorial coverage is worldwide (excluding United States/Canada).
Blue Spire Financial Planning Limited is authorised and regulated by the Financial Conduct Authority. FSA register reference 566257. This guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore targeted at customers based in the UK