That Bank of England has announced that it will raise interest rates by 0.75 percentage points to 3% – the largest single hike since the 1980s.
The bank warned Britain could be on course for its longest recession since reliable records began a century ago when it announced the decision.
She said more rate hikes may be needed to tame runaway inflation as she made the biggest single hike since 1989.
— Bank of England (@bankofengland) November 3, 2022
Jeremy Hunt has been urged to come to the House of Commons or hold a press conference to explain how to help mortgage holders in the run-up to the rate hike.
Liberal Democrat Treasury Department spokeswoman Sarah Olney said: “Chancellor must reach out to the country immediately after the rate hike decision is made to formulate a plan to rescue homeowners from the abyss.
“He should either come to Parliament or hold a press conference to announce support for families facing hundreds of pounds a month on mortgage bills.
“Hard-working families are paying the price for weeks of conservative mayhem. People are desperately worried about how they’re going to pay those staggering mortgage payments after tomorrow.
“The government cannot hide, especially after its long list of economic failures.”
How does rising interest rates reduce inflation?
But how does rising interest rates help fight inflation?
That Bank of England will take measures to keep inflation low and stable, known as monetary policy.
Higher interest rates will make it more expensive for people to borrow, encouraging the public to save rather than borrow, meaning people will tend to spend less.
As a result, people are expected to spend less overall on goods and services, which means the prices of those goods will increase
How does interest affect me?
Interest rates may seem small, but they can have a very big impact on finances.
That said, it’s important to keep track of whether they’re going up, down, or staying the same.
CONTINUE READING: What does the rise in interest rates mean for first-time buyers?
That means the projected 0.75% rate hike could mean buyers face an increased monthly payment, suggesting mortgage payments could account for more than 40% of a homeowner’s gross salary.
However, if you normally save money, banks may pay you more as interest rates drive up the amount they pay you back.
https://www.theargus.co.uk/news/23098707.bank-england-warns-longest-recession-amid-3-per-cent-interest-hike/?ref=rss Bank of England warns of ‘longest recession’ if rate rises 3%