The Bank of England (BoE) has confirmed that interest rates will rise by 0.25%, from 5% to 5.25%, the fourteenth consecutive rise since December 2021.
- The Bank of England increased its base interest rate to 5.25% from 5%, meaning the cost of borrowing for mortgages, credit cards and other loans is at its highest level since 2008
- Projecting the short-term future of the economy, the UK's central bank said it expects inflation to fall below 5% in the autumn or winter
- It signalled for the first time that it would keep interest rates higher and that they would remain higher until UK inflation is brought under control
- Governor Andrew Bailey said the rate of annual price rises must be brought back to its 2% target, as "inflation hits the least well-off hardest"
- The Bank also predicted the UK will not enter a recession - where the overall economy shrinks - but it expects growth to be limited and unemployment to rise
- Chancellor Jeremy Hunt acknowledged the rise will be difficult for many people, but says the government plan for lowering inflation is working and it is sticking to it
- His Labour party counterpart, Rachael Reeves, says the government is saddling people with higher mortgages, food bills and taxes
(Source: BBC News)
Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA), which represents car and commercial retailers across the UK commented:
“Interest rates have once again risen in a bid from the Bank of England to curb inflation and stabilise the economy. Whilst this may have a broader impact on consumer confidence, and personal finances by encouraging saving, purchasing vehicles and the freedom of transport will be a necessity for many. Therefore, franchised dealers will continue to offer the best price points and payment schemes to support motorist’s shifting spending budgets.
“As new electric vehicles still remain at a price premium in the market, there is a chance demand will dampen as the cost of borrowing increases. Electric Vehicle Approved (EVA) retailers will continue to promote the message that used EVs remain as viable alternatives to new EVs and helping subvert common misconceptions such as battery degradation, and anxieties around range.”