The Bank of England raised the base rate from 0.25% to 0.5% for the first time in since 2007.
According to the CNN, the Bank of England hiked its key rate on Thursday from a record low of 0.25% to 0.5%, a shift that economists widely expected. It’s the first time the central bank has increased the cost of borrowing since 2007, a move it says was needed to help control surging inflation. The pound was trading 1% lower against the dollar following the announcement.
The pound dropped against the euro and the dollar after the Bank of England announced it was raising interest rates. Sterling fell 1.7 per cent against the euro to €1.1204 (KSh 135.21), and about 1.36 per cent lower against the dollar to $1.3063 (KSh 116.13).
According to MoneySavingExpert.com, it means many mortgage payers could pay around £200/year(KSh27090.38) more per £100,000(KSh 13545189.30) they owe, but savings rates will also increase for many.
The Bank’s nine-member Monetary Policy Committee – which sets the base rate – voted by 7-2 to increase the rate. It said it had raised the rate in a bid to lower inflation to the 2% target, after the Consumer Prices Index, a key measure of inflation, rose to 3% in September.