Phew only a 0.25% increase in Bank Base Rate to 1.25%

Phew only a 0.25% increase in Bank Base Rate to 1.25%

12:21 PM, 16th June 2022, About 2 years ago 1

Text Size

The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 6-3 to increase Bank Rate by 0.25% to 1.25%. Three dissenters voting on the MPC all wanted to raise the rate by 0.5%.

The Bank expect growth to slow sharply in the near term and CPI inflation to average slightly over 10% at its peak in 2022 Q4. Conditional on the MPC’s forecasting for future energy prices, CPI inflation is projected to fall to a little above the 2% target in two years’ time, reflecting the unwinding of external factors, and to be well below this 2% target in three years due to a weakening UK environment.

The MPC judge the risks to their inflation forecasts to be skewed towards the higher end of the possible outcomes.

GDP is expected to fall by 0.3% in the second quarter as a whole, which is worse than forecasts in the May Report resulting in a more cautious approach to monetary policy.

CPI inflation is expected to be over 9% in the next few months and to rise to slightly above 11% in October. The increase in October reflects higher projected household energy prices following a prospective additional large increase in the Ofgem price cap.

It looks as if despite missing the 2% target by a massively wide margin the Bank is moving slowly in light of the economic headwinds in an attempt to not overshoot target in the medium term and throttle any recovery further down the line.


Share This Article


Comments

Mark Alexander - Founder of Property118

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

12:54 PM, 16th June 2022, About 2 years ago

Calculating the extra amount of interest you will pay as a result of the recent 0.25% interest rate rise isn’t exactly rocket science for some people. However, if numbers isn’t your thing and/or you would like to understand how the Bank of England decision will affect your cashflow and your tax position I’ve designed the wizard below for you to use free of charge.

A common misconception is that an interest rate rise also increases the tax bill of private landlords who own mortgaged property in their own name.

The reality is that an interest rate rise does actually reduce your tax bill, so it’s not all bad news!

Therefore, I have also programmed the wizard to calculate how much extra tax credit you will receive to reduce your future tax bill.

https://www.property118.com/interest-rate-rise-impact-calculator-wizard/

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership

or

Don't have an account? Sign Up

Landlord Automated Assistant Read More