The Bank of England increase base rate to 4.5%

The Bank of England has raised the base rate for the 12th time in a row, taking the figure to 4.5%.?

This is the highest level since 2008, when the global economy was in the grip of the financial crisis.?The Bank is trying to lower stubbornly high inflation, which currently measures 10.1% - more than five times its target of 2%.

The increase in base rate rise may affect aspects of your finances, such as your pension, your credit card debt, your investments and your spending power.?The Bank of England now expects inflation at the end of the year to be above 5%, compared with its below 4% forecast in February. This prediction has been adjusted based on high food prices, which have been increasing at their fastest annual pace since 1977.

Andrew Bailey, Bank of England governor, said:

“We are acutely aware of how difficult this rise in food prices is for people and especially for those people on lower incomes.?We do see that food price inflation will start to slow.”

The Bank of England added that the UK economy was now on course to avoid a recession this year, despite intense pressure on households from the largest annual rise in living costs in 40 years.

The base rate will be reviewed again on Thursday 22 June, whilst experts are divided on whether it will rise or fall in the future. You should keep an eye on the news and plan ahead for any changes that may affect your finances. For more information on our service offering and how we can support your business’s financial plans, contact us on 0161 633 2548.