So, the Bank of England has raised bank rate for the first time in more than three years as it looks to try and tackle rising inflation. They have raised it to 0.25%, from the previous level of 0.1%. The latest figures on inflation, revealed this week, show it is running at 5.1% (in the 12 months to November), which is significantly more than the Bank’s target of 2%.
The Bank’s Monetary Policy Committee voted 8-1 in favour of the increase. The move has come despite the growing fears that the Omicron variant of Covid could slow the UK economy down by causing people to spend less. Many commentators were not expecting a rise this month given that.
We think that the rise of Omicron has put the bank firmly between a rock and a hard place. If it wasn’t for Omicron, then we believe the rise would have been higher. As it is, it’s a gentle poke at inflation without adding to the general sense of worry across the nation that a more significant rise would no doubt bring.
As for what you really read this for and that’s probably to find out what it means for mortgages, we think not a lot. We will wait and see if lenders decide to make any upward moves in their rates, but we think they have already built rate rises into their pricing – and rises that were more significant. Also, SWAP rates, the rates at which banks lend to each other and a key determiner of fixed rate pricing, are actually failing right now.
So, all in all, there’s not much to see here. Feel free to move along.
Commentaires