London – The Bank of England has taken drastic measures to overcome the financial crisis. The interest rate has been increased from the current 2.25 percent to 3 percent. An increase of 0.75 percent has been made at once. This is the highest interest rate since 1989. Economists are evaluating this rate hike as a clear indication that the country is entering a prolonged economic recession.
This increase in interest rates will directly affect mortgage rates, bank loan interest, credit card payments and car loans.
Inflation in Britain is at its highest rate in 40 years. This hike in interest rates is part of plans to combat this. But the criticism of the opposition is that this will add momentum to the economic uncertainty.
The Bank of England today announced the eighth consecutive rate hike since December. Today was the highest increase.
Monthly average on tracker mortgages
The rise in interest will mean an average increase of £73 per month for standard variable rate mortgages and £46 per month. A rise in interest rates could push new mortgage offers, which are already close to six per cent, even higher.
The pound fell sharply against the dollar after the Bank of England’s decision came out.
Bank of England Governor Andrew Bailey’s response to the decision was that if strong measures are not taken now, the situation will become more complicated. This unexpected increase in interest rates comes despite the Treasury warning that there will be heavy measures including tax hikes to overcome the financial crisis.
English Summary: Bank of England increases interest rate to 3 percentage