Bank of England raises interest rates to 1.25%

It was announced today (16th June 2022) that the Bank of England has raised interest rates from 1% to 1.25% as it tries to get a handle on soaring inflation.

Inflation is currently at a 40-year high of 9%, and the Bank warned it could surpass 11% later this year. The Bank said rising energy prices were expected to drive living costs even higher in October, but added it would “act forcefully” if necessary should inflation pressures persist.

Commenting on today’s interest rate decision by the Bank of England’s Monetary Policy Committee, David Bharier, Head of Research at the British Chambers of Commerce (BCC), said:

“While expected, the decision to raise the interest rate will add further concern to businesses amid a weakened economic outlook, soaring cost pressures, and labour shortages.

“The increase signals the Bank’s intention to tackle inflation but businesses have been raising the alarm about spiralling prices since the start of 2021 and a higher interest rate is unlikely to address many of the global causes of this.

“The increase could impact smaller businesses who may be reliant on banking or overdraft facilities, for instance, those buying goods in bulk in an attempt to offset raw material shortages”.