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Bank of England | AccountingWEB | Interest rates held at 16-year high
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Interest rates held for sixth consecutive time

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Interest rates have again been held at a 16-year high by the Bank of England, with the Monetary Policy Committee voting 7 to 2 in favour of the decision.

9th May 2024
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Interest rates have been held at a 16-year high by the Bank of England for the sixth time in a row.

At its meeting ending on 8 May 2024, the Monetary Policy Committee (MPC) voted by a majority of 7 to 2 to maintain the bank rate at 5.25%, with the decision having been expected by economists. Two members preferred to reduce it by 0.25 percentage points, to 5%.

Inflation continues to fall back

Those behind the hold noted that headline CPI inflation, which currently sits at 3.2%, had continued to fall back, in part “owing to base effects and external effects from goods prices”.

“The restrictive stance of monetary policy was weighing on activity in the real economy, was leading to a looser labour market and was bearing down on inflationary pressures,” it added. “Key indicators of inflation persistence were moderating broadly as expected, although they remained elevated.

“There was a range of views among these members regarding the risks around the assumptions on persistence embodied in the May CPI projection.

“There was also a range of views about the extent of the evidence that was likely to be needed to warrant a change in Bank Rate, and the degree to which these members anticipated that incremental information in forthcoming data outturns would lead them to update materially their assessment of inflation persistence.”

Less restrictive

The two members who preferred a 0.25 percentage point reduction said that the Bank Rate needed to “become less restrictive now to enable a smooth and gradual transition in the policy stance and to account for lags in transmission”.

“Consumer price inflation was already, and had been for some time, on a firm downward trajectory. The latest forecasts showed inflation returning close to the target in the short term, and this was consistent with forward-looking indicators of output price inflation falling behind input price inflation.

“As the outlook for demand remained subdued, with vacancies continuing to fall and nominal pay growth easing, the risks to inflation returning sustainably to the target in the medium term were to the downside.”

Under review

Using the same words as it did in the last interest rate announcement, the BoE suggested there is unlikely to be a cut soon, saying: “Monetary policy will need to remain restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term in line with the MPC’s remit.

“The committee will consider forthcoming data releases and how these inform the assessment that the risks from inflation persistence are receding. On that basis, the committee will keep under review for how long the Bank Rate should be maintained at its current level.”

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By Justin Bryant
09th May 2024 17:46

Why are all BoE base rate stories biased in favour of borrowers? There are plenty of people (e.g. savers) who would prefer interest rates to stay high for a lot longer.

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Replying to Justin Bryant:
By Ruddles
10th May 2024 09:53

It's rather obvious - higher interest rates rate affect borrowers (in terms of both number of people and financial amounts) far more than they do savers. The bias is perfectly understandable. In fact, the first BBC report that I read did mention the benefit to savers - it got far less prominence than the discussion about the cost to borrowers but the respective emphases simply reflected the relative impacts.

In any event, where is the bias in the above article? I see nothing but facts.

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By Nebs
10th May 2024 09:42

Just so as people know what their parents/grandparents went through
12 Jul 91 10.88
24 May 91 11.38
12 Apr 91 11.88
22 Mar 91 12.38
27 Feb 91 12.88
13 Feb 91 13.38
08 Oct 90 13.88
06 Oct 89 14.88
08 Sep 89 13.75
04 Sep 89 13.88
31 Aug 89 13.84
25 May 89 13.75
25 Nov 88 12.88
25 Aug 88 11.88
08 Aug 88 10.88
21 Jul 88 10.38
07 Jul 88 9.88
24 Jun 88 8.88
10 Jun 88 8.38
03 Jun 88 7.88
17 May 88 7.38
08 Apr 88 7.88
17 Mar 88 8.38
01 Feb 88 8.88
03 Dec 87 8.38
04 Nov 87 8.88
23 Oct 87 9.38
06 Aug 87 9.88
08 May 87 8.88
28 Apr 87 9.38
18 Mar 87 9.88
09 Mar 87 10.38
15 Oct 86 10.88
23 May 86 9.88
18 Apr 86 10.38
11 Apr 86 10.88
19 Mar 86 11.38
15 Jan 86 12.38
26 Jul 85 11.38
11 Jul 85 11.88
19 Apr 85 12.38
28 Mar 85 12.88
20 Mar 85 13.38
28 Jan 85 13.88
14 Jan 85 11.88
23 Nov 84 9.50
19 Nov 84 9.75
05 Nov 84 10.00
17 Aug 84 10.50
16 Aug 84 10.75
09 Aug 84 11.00
08 Aug 84 11.50
11 Jul 84 12.00
06 Jul 84 10.00
29 Jun 84 8.88
10 May 84 9.06
14 Mar 84 8.56
07 Mar 84 8.81
03 Oct 83 9.06
10 Aug 83 9.56
09 Aug 83 9.44
14 Jun 83 9.56
13 Jun 83 9.81
14 Apr 83 10.06
13 Apr 83 10.31
15 Mar 83 10.56
12 Jan 83 11.00
26 Nov 82 10.00
02 Nov 82 9.13
01 Nov 82 9.38
12 Oct 82 9.63
30 Sep 82 10.13
29 Sep 82 10.25
28 Sep 82 10.38
27 Sep 82 10.50
27 Aug 82 10.63
26 Aug 82 10.88
25 Aug 82 11.00
24 Aug 82 11.13
17 Aug 82 11.25
16 Aug 82 11.38
04 Aug 82 11.50
02 Aug 82 11.56
30 Jul 82 11.63
29 Jul 82 11.75
28 Jul 82 11.81
26 Jul 82 11.94
21 Jul 82 12.06
13 Jul 82 12.13
12 Jul 82 12.25
09 Jul 82 12.50
08 Jun 82 12.63
20 Apr 82 13.13
19 Apr 82 13.00
16 Apr 82 13.13
10 Mar 82 13.25
25 Feb 82 13.63
22 Feb 82 13.81

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Replying to Nebs:
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By FactChecker
10th May 2024 19:01

Presumably those are MLR .. I recall rather higher rates being paid on my mortgage.

No fixed-rates, and no easy option to move before loan was fully paid off, so every month was 'interesting' ... as you waited for the little envelope that told you how much you had to pay next month (no DDs either) - or as my wife used to describe it 'whether we'd get to eat for 4 or only 3 weeks next month'.

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Replying to FactChecker:
paddle steamer
By DJKL
13th May 2024 13:51

Should have worked for a bank- staff mortgage capped at 5% and whilst my wife (County Natwest/Natwest Markets- the Blue Arrow lot ) had a BIK charge it was worth it for the stability that 5% brought.

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