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The Bank of England has raised interest rates to 3% from 2.25%, the biggest single rate increase since 1989.
Today’s announcement is the eighth consecutive rate increase and will lea d to interest rate increases for many of the UK’s mortgage holders as well as an increase in the cost of borrowing overall.
The rate increase was imposed despite the bank's monetary policy committee (MPC) predicting a prolonged recession, with GDP expected to keep falling into the first half of 2024 and inflation expected to stay in double figures in the near term before falling in mid 2023.
It is the first interest rate announcement since turmoil in the UK markets and sterling plunged to its lowest recorded level after a controversial mini budget imposed by the then Prime Minister Liz Truss and Chancellor Kwasi Kwarteng in September .
After the September budget, many UK lenders withdrew lower interest mortgage deals. The latest interest rate increase is expected to impact many UK homeowners, who are already struggling with inflation, which reached 10.1% in September, and a cost-of-living crisis.
(Reporting by Imogen Lillywhite; editing by Seban Scaria)
