The Bank of England Monetary Policy Committee recently voted 7 – 2 in favour of increasing the base rate from 0.25% to 0.5%. This is the first increase in over 10 years and is in line with what we have seen globally this year with rate increases from the US & European Central Bank.
There has been significant analysis in the press with regard to this but we have to take this rate rise in context.
Interest rates were at 0.5% from March 2008 to August 2016. The Bank of England then took the decision to drop the rate to 0.25% in a bid to support the UK economy after last summer's Brexit vote.
This latest decision to raise the rate back to 0.5% in November 2017 means that, despite all the fanfare, we’re in much the same place as we were last summer.
A Sign of Things to Come?
Do we think this is the start of fast and furious interest rate hikes? The short answer is no.
The Bank of England will take a very cautious and measured approach to interest rate decisions and will only increase rates if they feel that the wider UK economy can afford it.
For more information feel free to contact us directly by clicking here.