05.05.2022 | 2 minutes estimated reading time | Print this article

Interest rate raised to 1% by Bank of England

Interest rate raised to 1% by Bank of England

The bank of England has raised the base rate of interest to 1% – the fourth consecutive increase as it continues to move against surging inflation – despite issues a warning about recession ahead. Forecasters have predicted that the UK economy will shrink later this year in the face of double-digit inflation and the continuing squeeze on household finances.

The first forecast since the Russian invasion of Ukraine, the Bank has said the crunch on rising energy prices is likely to leave as lasting scar as it contributes to unemployment and weak or negative growth throughout 2023.

Kevin Mountford, co-founder of Raisin UK, commented: “While we were expecting a small increase today, in line with previous 25bps increases, many now feel a larger and more substantial increase will be needed to make an impact across the entire economy, as we now look to combat the increasing pressure on households and threat of considerable recession and unemployment throughout 2023.

“That said, now is the time for those with nest-eggs or rainy day funds to make smarter money moves and look to maximise any returns they can on their savings and go for higher interest accounts – 5 minutes now could be a lifeline later on as the economy looks to squeeze consumer money.”