Interest rates expected to be held for sixth time in a row.
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The decision comes as inflation – which measures price rises over time – remains above the Bank’s 2% target at 3.2%.
The Bank have also released today its forecasting estimations regarding what will happen to inflation and the UK economy.
Both Labour and the Conservatives have released pledges on how they would drive economic growth.
The state of the UK economy has been in the spotlight as a general election looms. It is likely that economic policies will be a key battleground for votes.
Why are interest rates high?
The Bank raised and kept interest rates at a high level. An attempt to slow the pace at which consumer prices have been rising and ease the cost of living.
The theory behind increasing interest rates to tackle inflation is, by making borrowing more expensive, more people will cut back on spending. That leads to the demand for goods falling and price rises easing.
But, it is a balancing act as high interest rates can harm the economy with businesses holding off on investing in production and jobs.
Prices started rising quickly as demand for goods increased when Covid-related restrictions were lifted. Energy and food prices then soared following Russia’s invasion of Ukraine, leading to inflation peaking at 11.1% in October 2022 – the highest rate in 40 years.
But what does this mean for you?
An interest rate tells you how much it costs to borrow money – or what the reward is for saving it.
The Bank’s base interest rate dictates the rates set by high street banks and lenders. The higher level has meant people are paying more to borrow money for things like mortgages. However, savers have also received better returns.
Mortgages
Mortgage rates are much higher than they have been for the last decade – and the current predictions show this is unlikely to change in the next month. This means monthly repayments will remain at their higher rate.
Homebuyers and those mortgaging have to pay a lot more than if they had borrowed the same amount a few years ago.
About 1.6 million deals will expire in 2024, according to banking trade body UK Finance.
Credit cards and loans
Bank of England interest rates also influence the amount charged on credit cards, bank loans and car loans.
Lenders could decide to put their rates up if they expect higher interest rates from the Bank of England. However, if rates fall, interest payments may become cheaper.
Savings
The Bank of England interest rate also affects how much savers can earn on their money.
Individual banks and building societies have been under pressure to pass on higher interest rates to customers.
There are some good deals on the market and experts say customers should shop around. Money may be in accounts paying little or no interest.
On Friday, the latest official figures on the economy will be released, which will confirm whether or not the UK economy grew in the first three months of 2024.
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Headline16-year high predicted for UK interest rates
Short HeadlineThe UK is looking at a 16-year high for interest rates
StandfirstThe Bank of England has hold interest rates at 5.25% for the sixth time in a row.
The decision comes as inflation – which measures price rises over time – remains above the Bank’s 2% target at 3.2%.
The Bank have also released today its forecasting estimations regarding what will happen to inflation and the UK economy.
Both Labour and the Conservatives have released pledges on how they would drive economic growth.
The state of the UK economy has been in the spotlight as a general election looms. It is likely that economic policies will be a key battleground for votes.
Why are interest rates high?
The Bank raised and kept interest rates at a high level. An attempt to slow the pace at which consumer prices have been rising and ease the cost of living.
The theory behind increasing interest rates to tackle inflation is, by making borrowing more expensive, more people will cut back on spending. That leads to the demand for goods falling and price rises easing.
But, it is a balancing act as high interest rates can harm the economy with businesses holding off on investing in production and jobs.
Prices started rising quickly as demand for goods increased when Covid-related restrictions were lifted. Energy and food prices then soared following Russia’s invasion of Ukraine, leading to inflation peaking at 11.1% in October 2022 – the highest rate in 40 years.
But what does this mean for you?
An interest rate tells you how much it costs to borrow money – or what the reward is for saving it.
The Bank’s base interest rate dictates the rates set by high street banks and lenders. The higher level has meant people are paying more to borrow money for things like mortgages. However, savers have also received better returns.
Mortgages
Mortgage rates are much higher than they have been for the last decade – and the current predictions show this is unlikely to change in the next month. This means monthly repayments will remain at their higher rate.
Homebuyers and those mortgaging have to pay a lot more than if they had borrowed the same amount a few years ago.
About 1.6 million deals will expire in 2024, according to banking trade body UK Finance.
Credit cards and loans
Bank of England interest rates also influence the amount charged on credit cards, bank loans and car loans.
Lenders could decide to put their rates up if they expect higher interest rates from the Bank of England. However, if rates fall, interest payments may become cheaper.
Savings
The Bank of England interest rate also affects how much savers can earn on their money.
Individual banks and building societies have been under pressure to pass on higher interest rates to customers.
There are some good deals on the market and experts say customers should shop around. Money may be in accounts paying little or no interest.
On Friday, the latest official figures on the economy will be released, which will confirm whether or not the UK economy grew in the first three months of 2024.
