Base Rate and Fixed Rate Increases

WHY:  Raising interest rates – to encourage people and firms to borrow and spend less, or to save money – is one of the tools it uses to limit inflation. Prices are now rising quickly in the UK and around the world, as consumers spend more.

WILL RATES CONTINUE TO INCEASE:  We hope that this will be the last increase in base rate for a while but that all depends on what happens in the economy. In particular, they will be watching closely what is likely to happen to the rate of inflation in the next 6 months.

They review how the economy is doing and whether a change in interest rates is needed eight times a year (roughly every six weeks).

FIXED RATES: There has been a large increase in rates from lenders and this is mainly down to the increase in Bank Base Rate but also because the banks and building societies are increasing margins.