MPC decision: Base rate held at 3.75% – Mortgage Strategy
The Bank of England has held interest rates at 3.75% for a sixth consecutive meeting.
Members of the Monetary Policy Committee (MPC) voted by a majority of 6-3 in favour of freezing the base rate in line with most economists’ expectations.
Three members voted to increase base rate by 25 basis points to 4%.
Many mortgage industry commentators were supportive of the MPC decision, but some argue that it is now time for the Bank to take steps to curb inflation.
There has been a raft of rate rises from lenders in recent weeks with many increasing prices twice already this month.
Adding further context to the decision, the MPC says that conflict in the Middle East pushed up energy and motor fuel costs and that “it is difficult to predict what is going to happen”.
It says “inflation has risen to 3.1% and we think it will go up even more as higher energy prices have their knock-on effects; higher bills could force businesses to increase their prices to cover the cost, for example”.
Bank of England governor Andrew Bailey says: “So far, higher global energy costs have had a limited effect on price and wage setting in the UK.
“But the longer this volatility persists, the bigger the impact it will have on inflation, and the more likely it is we will need to raise Bank Rate to ensure that inflation falls back to our 2% target.”
