The Bank of England has raised its base rate by 0.5 percentage points, the largest single upward jump in 27 years. It takes the base rate to 1.75%, its highest level since 2008. This latest interest rate hike will affect personal finances and reflects the Bank’s efforts to control rampant inflation amid the cost of living crisis in the UK.
The government tasked the Bank of England with maintaining UK inflation at a stable level of 2% a year. At present, inflation is way above this target at 9.4%, and it’s currently forecast to reach 13% by October. Among the main reasons for this high inflation is the massive surge in the prices of global energy, grain and other key commodities. This has been caused by recent supply chain disruption and the Russian war on Ukraine.
