The Bank of England has today announced it’s 13th consecutive base rate taking interest rates to 5 per cent.
The unexpected move came after the inflation rate remained static at 8.7 per cent, and has sparked concern among consumers who will face increased mortgage payments as fixed rate agreements come to an end.
Lloyd Powell, head of ACCA Cymru/Wales, said:
“While another interest increase seems quite a surprise, it was always on the cards given the high rate of inflation. You can really understand why many Welsh businesses and consumers, even when holding cash, are pulling back from investment currently.
“The increasing interest rates will have a big impact for many consumers. And the business sector should not be forgotten either. This is starting to look a grim day for businesses who have really struggled over the last couple of years. Small businesses in particular are going to have to manage their cost base and their working capital with great care.”
Jonathan Ashworth, ACCA’s chief economist, said:
“The Monetary Policy Committee surprised market expectations by voting for a larger than expected 50bps rate hike. Seven of the nine members supported the decision, noting that the stronger than expected wage and services inflation data suggested that there was more persistence in the inflation process. Key focus over coming months will be on developments in the labour market and with inflation, but the risk clearly lies in the direction of additional policy tightening.”
