HOUSEHOLDS were told yesterday to prepare for a 15-month recession and the highest inflation rate in 42 years. In what was dubbed a Black Thursday for the economy, the Bank of England raised intere…
Mr Bailey warned of further rises to inflation, which is currently at 9.4 per cent and more than double the four per cent he forecast a year ago.Dismissing claims the Bank should have acted quicker on inflation, he said: “I don’t think anyone would have reasonably forecast aEnergy regulator Ofgem said it would review its price cap every three months but the Bank said it expected costs to remain high to the end of 2023.
Higher interest rates — aimed at reducing consumer borrowing and spending — also feed into charges on credit cards, car finance and bank loans. Tim Bannister, Rightmove’s Housing Expert, said: “Today's 0.5% increase in the base rate takes average monthly mortgage payments for new first time-buyers to over £1000 if lenders pass on the rate rise to new applicants.The latest jump will put yet more mortgage-payers long used to low rates in serious difficulties., said: “Lenders can and must do whatever they can to help.
Mother-of-two Lydia Joseph, a researcher from Faversham, Kent, pays £1,718 a month on a mortgage fixed at two per cent. “This situation has not really come up in the past two decades because we’ve had falling or very low interest rates.”So far, HSBC and First Direct have confirmed that their standard variable mortgage rates will remain at their current levels for the time being - priced at 4.45%.
A rise in the base rate discourages borrowing and subsequently reduces spending power in the hope to bring inflation down.A country is in recession when its economy shrinks over a sustained period of time, rather than growing normally.
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