The Bank of England has raised interest rates to 0.75% – the highest level since 2009. The Bank’s Monetary Policy Committee (MPC), which sets interest rates, voted unanimously to increase the cost of borrowing from 0.5% to 0.75% at its August meeting.
In the minutes for the meeting, the Bank said “Although the global outlook was a little softer, recent data appeared to confirm that the dip in UK output in the first quarter had been temporary, with momentum recovering in the second quarter.”
“The labour market had continued to tighten and unit labour cost growth had firmed.”
“Given these developments, a 0.25 percentage point increase in Bank Rate was warranted at this meeting to return inflation sustainable to the target”
The decision to raise interest rates is the first unanimous decision to lift borrowing costs since May 2007.
The impact of the rise is likely to have varying effects on families and individuals across the UK, but a household with a £200,000 mortgage would likely see its payments increase by around £20-£25 a month.
How do you think you will be impacted by the rise? Comment your thoughts.