The Bank of England has raised interest rates for the first time since August 2023, dealing a fresh blow to mortgage borrowers and businesses already struggling with rising costs.<\/p>\n
The Bank’s Monetary Policy Committee voted 8-1 to increase the base rate by 0.25 percentage points, from 3.75% to 4%, amid renewed inflationary pressures linked to the conflict involving the United States and Iran.<\/p>\n
The widely anticipated decision reverses the recent direction of monetary policy and raises the prospect of higher borrowing costs for households and businesses.<\/p>\n
Bank of England governor Andrew Bailey warned that further increases could follow if the conflict in the Middle East continues to drive up energy prices.<\/p>\n
He said: “There is now enough inflationary pressure in the pipeline caused by the rise in energy prices that an increase in Bank Rate is warranted.<\/p>\n
“Today’s increase shouldn’t be seen as the first in an inevitable long sequence of hikes. But, unless the conflict in the Middle East is resolved, neither does it seem likely to be the last increase.<\/p>\n
“The MPC will judge the outlook at each meeting, responding as necessary to bring inflation sustainably back to our 2% target.”<\/p>\n
The increase comes as the UK faces further pressure on energy prices, with a sharp rise in the domestic energy price cap expected this winter.<\/p>\n
For mortgage holders on tracker rates, the increase is likely to feed directly into higher monthly repayments.<\/p>\n
Borrowers approaching the end of fixed-rate deals could also face more expensive refinancing, although lenders typically adjust their mortgage pricing ahead of anticipated Bank of England decisions.<\/p>\n
Businesses reliant on variable-rate borrowing could see their financing costs increase, adding to existing pressures from wages, energy bills and other operating expenses.<\/p>\n
The impact could be particularly significant for companies with substantial debt or those planning investments funded through borrowing.<\/p>\n
However, the decision could provide some relief for savers if banks and building societies pass on the higher base rate through improved deposit rates.<\/p>\n
The Bank’s decision reflects concerns that rising energy costs could push inflation higher and make it more difficult to return price growth to its target.<\/p>\n
The increase also signals a more challenging outlook for borrowers after a period in which interest rates had been moving downwards.<\/p>\n","protected":false},"excerpt":{"rendered":"
Borrowers face renewed financial pressure as policymakers respond to rising inflation concerns<\/p>\n","protected":false},"author":25,"featured_media":2174222,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[120782],"coauthors":[95],"class_list":["post-2182236","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","tag-featured-story","tag-national"],"yoast_head":"\n