For the first time in a decade, the Bank of England has made the decision to increase the interest rate from 0.25% to 0.5%, an increase of 0.25%.
This decision reverses the rate cut of 2016, which was implemented to ease spending in the aftermath of the Brexit vote. According to reports, the decision was not a unanimous one, with two Deputy Governors dissenting. They were, however, outvoted by the Monetary Policy Committee.
In response, Rain Newton-Smith, CBI Chief Economist had the following to say; “The decision to raise interest rates comes as no surprise, given the recent signals from the Bank and several Monetary Policy Committee members signalling their intention to vote for a change of course.
“While it’s the first rate rise in over a decade, it is only taking the rate back to the level seen in August 2016 and at 0.5% it remains near rock bottom.
“Businesses will be watching the reaction of consumers closely and what’s important is the pace of any future rises. As rates creep up, it’ll be important to keep an eye on the impact for those at the lower end of the income scale.”