Bank of England raises interest rates to 5%
The Bank of England has today increased interest rates by 0.5% to 5%. This is the 13th consecutive rise and the largest single rise since February this year.
Voting by a majority of 7-2, the Monetary Policy Committee (MPC) agreed to increase the base rate. The increase was by 0.5% at its meeting on 21.06.2023.
The MPC is continuing to closely monitor the impact of the increases in Bank Rates so far. The Bank of England’s May Report explains that with a larger proportion of fixed-rate mortgages, the full impact of previous increases in Bank Rates will not yet materialise.
Bank of England Twelve Month CPI inflation
In its report, the BoE stated that CPI inflation over the past 12 months reduced from 10.1% in March 2023 to 8.7% in April 2023, remaining at this rate in May 2023. This is 0.3% points higher than what was expected in the May report. More particularly, services CPI inflation increased to 7.4% in May. This is 0.5% points greater than was expected at the time of the May report. Additionally, core goods price inflation has been considerably stronger than was previously projected.
CPI inflation is still expected to reduce considerably during 2023, largely due to decreases in energy prices.
The Bank of England again states that its MPC will continue to adjust Bank Rate as required, This is to return inflation to the 2% target in the medium term, in line with its remit.
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