On Thursday at midday the Bank of England’s monetary policy committee will announce an interest rate rise. Some City analysts have predicted the announcement will jack up the rate by 0.75 of a percentage point (mimicking that of the European Central Bank in early September) to a total of 2.5%. An upward jump of this size has not occurred since the Bank was made independent in 1997. And the last time interest rates have moved by more than half a percentage point in either direction was in the depths of the 2008 banking crisis, when they were cut rapidly in an effort to shore up the circulation of credit.
Even if, as other observers expect, the announcement is merely of a rise of a 0.5 percentage point, it will be one more step on a staircase that is likely to reach at least 4% by early next year. Regardless of pace, these rises mark the conclusion of one of the most extraordinary economic policy experiments in modern history. The architects of this era – characterised by uniquely low interest rates – were unelected technocrats rather than politicians, and yet they leave a profound political and economic legacy of spiralling inequality, channelled above all through the ownership of housing.
