Bank of England raises interest rates to 4% for first time in years

Summarised from 2 outlets · Updated 5 Nov, 17:03 · Archive

The Bank of England has raised its base interest rate to 4% from 3.75%, the first increase in more than three years.

The Bank of England's monetary policy committee has voted unanimously to raise the base interest rate to 4% from 3.75%, the first increase in more than three years. One committee member, Catherine Mann, preferred a larger 0.5 percentage point rise.

The central bank said the increase was warranted because inflation in the UK economy was rising and would continue to rise as the war in Iran goes on. It also said that borrowing costs were likely to go up further if there continued to be no resolution to the conflict.

Higher interest rates are the central bank's main tool for reducing inflation. By making borrowing more expensive, higher rates weigh on demand and can cause firms to limit price increases. The higher base rate means homeowners on tracker mortgage rates will see increased monthly payments. Those on fixed-rate mortgages will not feel the immediate impact of the hike on their home loan, though they may face higher payments when their deal expires. Savings rates are also linked to the interest rate, so some bank customers will likely see their savings rates rise.

How it is being reported

• Why have interest rates risen and what is happening in the economy?The base rate helps dictate how expensive it is to take out a mortgage or a loan.Evening Standard · 5 Nov, 16:37
• Why have interest rates risen and what is happening in the economy?The base rate helps dictate how expensive it is to take out a mortgage or a loan.Independent Business · 5 Nov, 16:37

In this story: Bank of England · Catherine Mann · Iran · UK

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