The Bank of England has taken further tightening measures to combat the ongoing challenge of inflation.
This marks the 14th consecutive interest rate hike for the UK, pushing rates to a 15-year high.
The move aims to curb inflationary pressures but has placed significant strain on borrowing individuals and businesses.
Latest Interest Rate News
The Bank of England has raised the UK interest rate to 5.25%, continuing its efforts to control inflation.
As of August 3rd, rates have been increased by 0.25%.
The last time the interest rate reached 5.25% was in April 2008.
Why Continuous Interest Rate Hikes?
In order to maintain the 2% inflation target, the Bank of England needs to continuously adjust interest rates to approach the target as closely as possible.
Simply put, raising interest rates encourages people to save money in banks rather than borrowing for consumption.
On the other hand, when the cost of borrowing increases, disposable cash decreases.
If households purchase fewer goods, it can slow down price increases.
Meaningless Rate Hike?
Even before the final decision was announced, protesters gathered outside the Bank of England’s headquarters to protest this “meaningless rate hike.”
They calling for the government to impose windfall taxes on bank profits.
While rising interest rates inevitably cause significant hardship for borrowers and families.
Banks have stated that savings rates will also rise accordingly.
Predictions of Continued Interest Rate Hikes
In addition to today’s rate hike decision, experts predict that rates will continue to rise.
They forecast rates to reach 5.75% by November and expect a potential interest rate decrease only by next summer.
The future situation remains uncertain, but this serves as a valuable reference for those considering buying a house through loans.
