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Interest rates
Last month, the Bank of England raised the interest rates from 0.25% to 0.5%, which was the first increase in 10 years. Yet, in the Monetary policy committee (MPC), they stated that there would be a “modest” increase in interest rates over the next few years.
At this month’s meeting (December) the members of the MPC decided to keep interest rates at 0.5%. This is due to the level of unemployment being down, rising inflation and stronger global growth.
Inflation rates
In November, inflation rates rose to 3.1%, which is the highest in nearly 6 years. Yet the average weekly wage is growing at a rate of just 2.2%.
The national target inflation rate for the UK is set to 2%, however, the UK is now 1.1% above this national target. This means that Mark Carney; the governor of the Bank of England will have to write a public letter to the Chancellor of the Exchequer.
This is due to a rule stating that if the inflation rate rises or drops 1% above or below the national target of 2%, then a letter has to be written. Within the letter, it will state how Mark will aim to get it down to 2%. This letter will be publically announced in February 2018, along with the quarterly inflation report from the Bank of England.
The last time Mark Carney wrote a public letter was December 2016, as in October that year, the inflation rate dropped to 0.9% (1.1% under the national target).
For more information on interest rates, inflation rates and general economy/monetary issues, then take a look at our ‘news’ section. Here we have the most up to date issues, whether it be industry news or any general news. When it happens we will bring it to you.
