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Bank hits mortgage holders with another 0.25 percentage point hike The Bank of England raised interest rates to their highest level in 15 years, putting additional pressure on mortgage holders. Rates rose to 4.25% for the 11th consecutive increase after yesterday's inflation shock overcame fears of a banking crisis that rocked the financial world.
The Monetary Policy Committee acted in light of similar hikes by the Federal Reserve, Swiss Central Bank and Bank of Norway in the hours before members were called to vote.
Experts had warned that rising interest rates were partly to blame for the collapse of banks in the United States and the fate of Credit Suisse, with account holders withdrawing their money to avoid expensive loans.
Stuart Gregory, managing director of Lentune Mortgage Consultancy, warned that a rate hike would cause "more damage."
"Millions of borrowers are looking to double or triple their current mortgage spending this year as their low rates come to an end. Nobody wins, because homeowners will have to trade that, too," he said.
The MPC voted just one day after the surprise jump in consumer price index inflation to 10.4% in February.
The Bank of England risks plunging Britain into a "full recession" by raising interest rates, according to an economic expert.
Joe Nellis, Professor of Global Economics at Cranfield School of Management, in reaction to the Bank of England interest rate decision, said: "The Bank of England's decision to raise interest rates to 4.25% could sink the economy into a full-blown recession.
“A recession in growth was inevitable before the increase, but the MPC vote will only set back any prospects for an economic recovery. Why did the monetary policy committee vote to make things worse?
“Households are already facing the biggest drop in their standard of living in many decades and the banking sector is under pressure. More interest rate hikes will do more harm than good at this point.
The Bank of England raised interest rates to 4.25% from 4%.
They made the decision after official figures earlier this week showed a surprise rise in consumer price index (CPI) inflation in February and estimated that the UK's gross domestic product (GDP) was likely to perform better than expected. what was previously thought.
Two members, Swati Dhingra and Silvana Tenreyro, voted against the increase, arguing that some of the recent base rate increases have yet to trickle down into the real economy.
Seven members of the Bank of England's Monetary Policy Committee (MPC) voted to increase the base interest rate from 4% to 4.25%.
The Bank of England appears to be the third central bank to raise interest rates today after Norway approved a 0.25% hike.
Norges Bank has set its benchmark rate at 3% and expects a further 0.5% rise for the summer after a weaker-than-expected krona trumps fears of a banking crisis.
The Swiss central bank raised its key interest rate and insisted that rival bank UBS's government-orchestrated takeover of Credit Suisse ended the financial crisis.
In a statement, the Swiss National Bank (SNB) said it strongly supported the deal to merge Switzerland's largest banks and that Sunday night's announcement by the federal government, financial regulators and the central bank "put an end to the crisis".
"The insolvency of Credit Suisse would have had serious consequences for national and international financial stability and for the Swiss economy," said Thomas Jordan, chairman of the board of directors of the Swiss Central Bank. "Taking that risk would have been irresponsible."
The Swiss central bank has raised its benchmark rate by half a percentage point to counter inflation, which has risen since the beginning of the year to 3.4% last month.
The Bank of England will look to the United States for a decision on whether to raise interest rates.
The Washington Federal Reserve voted yesterday to raise the base rate by 0.25 percentage points to a 16-year high of 4.75% to 5%.
The rise was less than expected before the banking crisis in recent weeks, which was partly attributed to higher rates prompting businesses to dip into their savings rather than resort to more expensive loans.
The leaders of the financial services giants will join forces in a plan to secure the future of the UK financial sector.
It comes as the country awaits the latest interest rate decision from the Bank of England, which will rise for the 11th time in a row after yesterday's sharp rise in inflation and weeks of banking instability.
The scheme, which involves Lloyd's, JP Morgan and Barclays, among others, will identify risk areas in the UK financial sector and ensure innovation for sustainable finance, the City of London Corporation has confirmed.
Katharine Braddick, Group Strategic Policy Director, Barclays, said: “Recent geopolitical shocks and the common challenge of climate change remind us that global economies are interconnected. The UK can play a leading role here in setting international standards.
Stuart Gregory, managing director of Lentune Mortgage Consultancy, tweeted that today's BoE rate hike would do "more damage."
He said: The truth is that the Bank of England raising interest rates tomorrow will do more damage.
"Millions of borrowers are looking to double or triple their current mortgage spending this year as their low rates come to an end. Nobody wins, because homeowners will have to trade that, too."
Investec Economics predicts that the BoE will take a "wait and see approach" and keep rates at 4% while it assesses the situation.
Economist Ellie Henderson said: "The MPC will have to assess which is the lesser of two evils: the risk of inflation being higher for longer or the ongoing threat to financial stability as a result of fears of a banking crisis that they evolve rapidly.
With food prices rising 18%, the MPC simply cannot afford not to act, writes James Moore.
With food prices rising 18%, the MPC simply cannot afford not to act, writes James Moore
The Bank of England is expected to raise interest rates for the 11th time in a row today after an unexpected resurgence in UK inflation.
Economists are confident of a rise to 4.25% from 4%, with the case for a rise bolstered by official figures on Wednesday that revealed an unexpected jump in inflation to 10.4% last month.
The midday decision also comes after the US Federal Reserve raised its overnight interest rate by a quarter of a percentage point, despite recent turmoil in financial markets amid fears of a crisis. banking.
But the Bank of England faces a difficult balancing act, weighing the need to rein in inflation with concerns about banking problems and the possibility that it will start to tighten lending.
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