Bank of England raises key rate to 4%, first increase in over three years
The Bank of England lifted its base rate from 3.75% to 4% to fight inflation tied to the Iran war. It also warned of another increase, which could raise borrowing costs for households.
For the first time in over three years, the Bank of England has lifted its key rate. The base rate, which shapes what people pay to borrow and earn from saving, moves up from 3.75% to 4%. The central bank also signaled that it expects to raise rates again.
Of the nine people on the Bank's monetary policy committee (MPC), the group that decides the rate, eight backed a rise of a quarter point. Catherine Mann, the ninth, argued for a larger move of half a point.
The move is meant to fight rising inflation, the pace at which prices climb. The Bank linked that inflation to the Iran war, which continues to push up energy costs.
The decision came a week after the government's budget. The timing means households and businesses are now facing both new budget measures and higher borrowing costs at once.
Bank of England base rate
- Before3.75 %
- After4 %
Figures are the Bank of England's base rate before and after the decision.
Background
The Bank of England's monetary policy committee has nine members who vote on the base rate. The decision follows a week after the budget.
People in this story
- Catherine Mann, MPC member, favored half-point rise
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