google-site-verification=0bx1QYafX4YUxAV2RLbOiDD2WzOMRAju_YMPZqdCR1E Bank of England raises interest rates by 0.5 percentage points

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Bank of England raises interest rates by 0.5 percentage points

Bank of England raises interest rates by 0.5 percentage points

The Bank of England raised interest rates to 5%, a surprise 0.5% hike, as the Bank of England and Prime Minister Rishi Suakna pledged to curb ongoing inflation.

Sunak said he backed the Bank of England's decision, pledged to stick to fiscal policy to keep inflation down from 8.7% in May, and tax cuts should come soon, Conservative lawmakers said. warned.

"Would you like to cut taxes tomorrow? But borrowing a lot of money to make something look good is not the most responsible approach," Sunak said at a news conference in Kent.

The Governor of the Bank of England, Andrew Bailey, has also been a consistent advocate of the need to curb inflation. "We don't expect and don't want a recession, but we will take all necessary steps to bring inflation back to our target level," he said.

The Bank of England's Monetary Policy Committee on Thursday said it was reacting to "important news" in recent data showing the intensity of inflationary pressures on the UK economy after voting 7-2 to raise rates.

The Bank of England hopes its bold move to raise interest rates to its highest level since 2008 will signal its determination to fight inflation.

"I know this is difficult. It's no surprise that many people with mortgages and loans are worried about what this means for them," added Bailey.

"But if we don't raise rates now, things could get worse later. We aim to get inflation back to our 2% target and we will make the decisions necessary to get there. It is."

Chancellor of the Exchequer Jeremy Hunt said the Bank of England was "fully supportive". Bailey Hunt said in the letter that the government will continue to coordinate fiscal policy with tightening central bank monetary policy.

"This will require continued discipline in public spending and tax policy," he added. Several Conservative MPs called for tax cuts in Mr Hunt's fall manifesto ahead of next year's general election.

And with the 0.5 percentage point hike, the 13th straight rate hike, the MPC rose a quarter of a percentage point, beating the expectations of the market and most economists.

This has amplified market movements over the past month, prompting lenders to repricing fixed-rate mortgage deals, creating a 'time bomb' for mortgages.

Borrowers with variable or traceable transactions are more likely to see their monthly bills increase rapidly. Broker L&C Mortgages said a borrower taking a £200,000 mortgage for 25 years at a standard floating rate of 7.99% would pay £67 a month, or an increase of £800 a year.

Bailey said the decision to raise rates was taken "in view of the growing resilience of the UK economy and new evidence of robust inflation".