Interest Rates Rise to 0.75%, up 0.25% to pre-pandemic levels
Interest rates have increased today to 0.75% the Bank Of England has confirmed. This follows the Bank of England’s Monetary Policy Committee meeting.
The committee sets monetary policy to meet the 2% inflation target. At is meeting on 16.03.2022, it voted by a majority of 8-1 to increase the Bank Rate by 0.25 percentage points, to 0.75%. Only One member preferred to maintain Bank Rate at 0.5%. This takes the rate back up to pre-pandemic levels.
In its Monetary policy summary for March 2022 it states that developments since its last report (February 2022) are likely to accentuate the peak in inflation and also the adverse impact on activity by intensifying household incomes squeezes. With regards to inflation, it cites that the invasion of Ukraine by Russia has led to additional large increases in energy as well as other commodity prices, which include food.
When will interest rates rise again?
The Bank of England reviews how the economy is performing and whether interest rates need to be changed eight times a year. The next review is scheduled for Thursday 5 May. After this, the remaining dates for 2022 are confirmed as follows:
- Thursday 16 June
- Thursday 4 August
- Thursday 15 September
- Thursday 3 November
- Thursday 15 December
Will the interest rate rise affect your business?
Rises in interest rates can often affect businesses in a number of ways, so it is important to understand how interest rate rises may impact you.
Innovation and Investment – consider if interest rises affect your spending on investment and innovation? Ensuring R&D tax credits are correctly claimed may greatly assist here.
Current business loans – examine how additional interest costs effecting business loans and company credit cards could impact your cashflow and profits.
Short term credit – consider how reliant the day-to-day operations of the business is on short-term bank credit, and how will rate rises alter this.
Foreign currency – where businesses trade internationally, or those that accept foreign payments, consider how rate rises could affect the value of foreign currency income or reserves.
HMRC & late taxes – the late payment interest rate (currently 3%) is likely to rise
Alexander & Co – business advice
For accountancy and taxation advice to help your business, Alexander & Co can assist you. From providing advice on R&D tax credits for innovation and investment, through to business restructuring and advice on becoming more tax efficient, our corporate advisors are on hand to ensure you receive expert advice.
To discuss our services and how we can assist your business, please fill in the form below, call us on 0161 832 4841 or email info@alexander.co.uk
