In the News
Monetary Policy - Bank of England raises interest rates from 0.1% to 0.25%

17th December 2021
The Bank of England has raised the base rate from 0.1% to 0.25% - a signal that they are prepared to tackle rising inflation.
The Monetary Policy Committee voted by a majority of 8-1 to increase #BankRate to 0.25% and by a majority of 9-0 to maintain the amount of quantitative easing at £895bn. https://t.co/8N5Szd2mD3 pic.twitter.com/b7rsd11fi8
— Bank of England (@bankofengland) December 16, 2021
It's caught many people out, with most expecting the Bank to adopt a wait-and-see approach in the face of the Omicron variant.
The Guardian details here how a rise in interest rates is going to affect borrowers and savers. At the moment, not a lot is going to change - since 2019, 96% of mortgages taken out have been fixed rate.
Larry Elliott assesses here the reasoning behind the MPC's decision to raise interest rates, concluding that the Bank have taken the view that the risks of entrenched inflation are higher than the downside risks to growth of the Omicron variant.
It would be interesting to have an in-depth look at the MPC minutes. Is there an economic basis for this decision, or is it more of a 'finger-in-the-air' sort of calculation. I suspect that irrespective of the answer, it will always be dressed up as the former.
The red line is inflation.
— Ed Conway (@EdConwaySky) December 17, 2021
The black line is official @bankofengland interest rates.
Bank rate may have gone up but it is still many, many multiples lower than the last time inflation was where the Bank thinks it's heading. pic.twitter.com/xBCmuvPsuT
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