The Bank of England is expected to unveil the biggest interest rate rise since the 1980s today (Thursday, Nov 3) as it tries to control runaway inflation, which is battering British households. In a crunch meeting, the nine members of the Monetary Policy Committee will make a decision that could push up the amount millions of mortgage holders have to pay their banks every month.
The consequential decision is expected to push up the Bank’s base interest rate from 2.25 per cent currently to 3 per cent, the highest since 2008. Mortgages are decided against this rate. If – as expected – the Bank raises interest rates by 0.75 percentage points, it would be the biggest single increase since 1989. It will also be the eighth time in a row that the Bank hikes interest rates. Less than a year ago the rate was 0.1%.
Earlier this month, markets had predicted the interest rate increase could be as much as one percentage point but sentiment has calmed somewhat after the change of Chancellor and Prime Minister, and Bank of England bond purchases pushed down on the cost of borrowing. Markets have also witnessed a decreased appetite for large hikes globally, with the Bank of Canada increasing its interest rate by 0.5 percentage points, below the widely-predicted 0.75 percentage point rise.
