Normalising interest rates | tutor2u Economics

This autumn, the Bank of England is expected to start raising policy interest rates from an ultra-low level of 0.25%.

As we approach the tenth anniversary of the UK economy last falling into recession (the second quarter of 2008), it remains a remarkable fact that policy interest rates in the UK and many other developed countries have historic lows at close to or below 0%. 

The Bank of England’s Monetary Policy Committee (MPC) lowered the base rate from 0.5% to 0.25% on 4 August 2016, the first change since March 2009, and the lowest since the Bank was founded in 1694.

Slowly and in small steps, we are likely to see the main monetary policy interest rate to edge higher as the process of normalisation starts. 

There is much uncertainty about the timing and scale of interest rate rises, not least with Brexit uncertainty a key feature going forward.

Here are some links to the lively debate among academic economists over whether now is the right time for the Bank of England to raise interest rates. 

Your starting point could well be this article from BBC news - Is now the time to raise interest rates?

This Guardian article is also excellent from an evaluation perspective - Twist or stick: two sides of the vital interest rate decision facing UK

Oxford economist Simon Wren-Lewis makes the case for keeping interest rates at their current low

Andrew Sentance argues that rates should be rising now

The Economist believes the next rate rise should be delayed

Former BBC Newnight economist Duncan Weldon fears weakening economic activity and confidence means that this is not the moment to raise interest rates.

Subscribe to email updates from the tutor2u Economics

Join 1000s of fellow Economics teachers and students all getting the tutor2u Economics team's latest resources and support delivered fresh in their inbox every morning.

You can also follow @tutor2uEconomics on Twitter, subscribe to our YouTube channel, or join our popular Facebook Groups.

Job board

Economics Teacher

Bromley High School, Bromley, Kent

Related Collections

Teaching Vacancies


Advertise your vacancies with tutor2u

Much cheaper & more effective than TES or the Guardian. Reach the audience you really want to apply for your teaching vacancy by posting directly to our website and related social media audiences.

Find our more ›

Advertise your teaching jobs with tutor2u

A New Home for tutor2u Resources

We've just flicked the switch on moving all our digital resources to instant digital download - via our new subject stores.

For every subject you can now access each digital resource as soon as it is ordered. This will always be the latest edition of each resource too (and we'll update you automatically if there is an upgraded version to use).

Simply add the required resources to your cart, checkout using the usual options and your resources will be available to access immediately via your mytutor2u account.