A increase in Bank of England Base Rate has been expected for some time and today (2 August) the Bank’s Monetary Policy Committee (MPC) announced a quarter of one percent increase to 0.75% following a unanimous decision.
Consumer Price Index (CPI) inflation was 2.4% in June which is above the 2% target.
It is thought that the economic outlook could be influenced significantly by the response of households, businesses and financial markets to developments related to the process of the UK’s exit from the EU. The MPC said: “The Committee also judges that, were the economy to continue to develop broadly in line with its Inflation Report projections, an ongoing tightening of monetary policy over the forecast period would be appropriate to return inflation sustainably to the 2% target at a conventional horizon. Any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent.”
The last rate rise was in November last year but prior to this it was 10 years ago.
Those with borrowing on variable rates could feel some financial pain as borrowing rates tend to react much quicker to interest rate rises than savings rates do.
Savers don’t often see the full effect of a rate rise being passed on. Anyone with substantial savings on deposit and looking for a more meaningful return should contact one of our Financial Planning Consultants to discuss our bespoke cash management service which may be of interest to personal investors, companies, trustees and charities.
To find out more, contact our Financial Planning Consultants at an office near you in Cumbria, Northumberland, Yorkshire and Scotland or visit our Financial Planning and Wealth Management website.Visit website
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