22-6-2023 (LONDON) The Bank of England (BoE) has made the decision to raise UK interest rates to a 15-year high of 5% as part of its ongoing efforts to combat inflation. Despite concerns over the potential impact on mortgage-holders, the BoE’s monetary policy committee unanimously agreed to increase the benchmark rate from 4.5% to 5%, representing a half a percentage point rise.
This latest move marks the 13th consecutive interest rate hike in the UK since December 2021. Prior to the announcement, there was speculation among city investors regarding the magnitude of the increase, with some expecting a quarter-point rise while others anticipated a larger half-point adjustment.
The decision to tighten policy comes in response to persistently high levels of inflation in the UK, which remained at 8.7% in both April and May. The BoE was under pressure to take action to address this issue.
However, the rise in interest rates is expected to heighten the financial strain on borrowers and could lead to further increases in fixed-rate mortgage costs. Economists are concerned that millions of households may face significant reductions in their income as a result of higher mortgage rates in the coming months.
