 Millions of homeowners will find their mortgage goes up as a result of rising interest rates. Savings rates should go up as well, although most banks have been slow to pass on increases. The Bank is raising interest rates to try and cool soaring inflation. The idea is that by raising interest rates, households will spend less and this should mean inflation will drop. Consumer Price Index (CPI) inflation in the UK is currently at a 40-year-high of 10.1%. The warning came as the Bank predicted a 'very challenging outlook' for the UK. The MPC believes the country has already fallen into recession. And it warned that, if interest rates rise as financial markets are predicting, the downturn would last for two years. That would be the longest on records going back to the 1920s. The Bank also now believes inflation will not rise as much as initially feared because of the Government's action to limit spiralling energy bills. It added: 'CPI inflation is projected to fall sharply to some way){kind=link}
The Bank of England has hiked interest rates to 3% – but what exactly does it mean for your mortgages, debts and savings? We explain everything you need to know
UK interest rates have been hiked to 3% as the Bank of England confirms its biggest single rate rise in 33 years.
The Bank of England is also now warning the country could face its longest recession on record, piling more misery onto struggling Brits.
The base rate has been increased by 0.75 percentage points – up from 2.25%. It marks the biggest single rate increase since 1989, and means interest rates remain at a 14-year high.
Today is also the eighth time in a row the Bank of England has decided to increase its base rate. Interest rates were at just 0.1% a year ago.