Bank of England delays interest rate decision for next week as Britain enters period of national mourning for Queen
- The Bank of England was due to make a rate decision Thursday, September 15
- The Monetary Policy Committee has raised the base rate since December
- Rate expected to rise by 2.25% at the Committee meeting of September 22
- The country is now in a period of national mourning for the Queen
The Bank of England’s monetary policy committee has delayed a decision on whether to raise the base rate by a week as the country enters its period of national mourning following the death of Her Majesty Queen Elizabeth II.
A period of national mourning for the Queen has now begun and will continue until the end of the day of her state funeral, which is thought to be 10 or 11 days away.
The committee, which was scheduled to meet on Thursday, September 15, will now meet on Thursday, September 22 with a decision announced at noon.
The Bank of England’s monetary policy committee was due to meet next Thursday to decide whether to raise the base rate, but will now meet a week later
The committee is widely expected to raise the base interest rate by 0.5% to 2.25%, in a bid to rein in inflation which has soared to 10.1% in recent months and is expected to reach 18.6% at the start. Next year.
Yesterday the European Central Bank announced a 0.75% hike in all its key rates, warning it was likely to raise them again before the end of the year, citing price pressures across the bloc .
The Bank of England has tentatively started raising its base rate from the pandemic record low of 0.1% in December, initially in steps of no more than 0.25 percentage points.
But last month it raised rates by 0.5 percentage points to 1.75% – the biggest rise since 1995 – as it became clear inflation was spiraling out of control.
Delaying the decision will mean that borrowers and savers will have to wait longer to find out how much interest rates will rise.
Following the latest rate decision on August 4, the typical two-year fixed mortgage rate rose above 4% for the first time in nearly a decade, according to Moneyfacts.
The average of 4.09% means that for a mortgage of £200,000 the monthly payments are around 18.6% more expensive than at the same time last year, when the average was 2.52%.
Although not directly tied to the base rate, interest rates on new fixed rate mortgages generally increase when the base rate rises because banks have to pay more to borrow money.
But while rising borrowing costs will put more pressure on some households’ finances, yesterday’s announcement by new Prime Minister Liz Truss of an energy price freeze relieved those worried about the skyrocketing bill costs.
The offer to support Britons facing spiraling gas and electricity bills, will block the planned rise in the energy price cap on October 1 to £3,549 for the average household and cap it at 2,500 £, with all households then getting a £400 discount.
You can find out how your household is likely to be affected by the price freeze here.
Bank of England postpones decision on base rate after Queen’s death