Auto Amazon Links: No products found. Blocked by captcha.
The Bank of England is set to hold a meeting on Thursday, with market experts expecting a cut to interest rates from their current level of 5%. Interest rates have a significant impact on mortgage, credit card, and savings rates that affect millions of individuals across the UK. Despite the first rate drop in more than four years last August, the cost of borrowing remains high for many consumers.
Interest rates determine the cost of borrowing money and the reward for saving it. The Bank of England’s base rate is what the institution charges other lenders to borrow money, which influences what lenders charge their customers for mortgages and the interest rate they pay on savings accounts. Changes to the base rate help control UK inflation, which is the increase in the price of goods and services over time. The Bank moves rates up and down to reduce demand and encourage people to spend less in order to bring inflation down to or near the 2% target.
Currently, the Bank rate is at 5%, which was previously 5.25%, the highest level since 2007. If inflation rates remain lower, experts forecast that the Bank may lower interest rates more gradually over the coming months to maintain low inflation rates, but it must be careful not to cut too fast or by too much and risk damaging the economy. While competition in the market has brought some rates down, mortgage rates remain much higher than the past decade’s rates.
Interest rates have significant implications for borrowers and savers. For example, credit card, bank loan, and car loan rates are determined by Bank of England interest rates. Though, if rates fall, interest payments may become cheaper for borrowers. Conversely, savings rates are influenced by the Bank of England interest rate, and individual banks and building societies are under pressure to pass on recent higher rates to their customers.
Finally, the UK has had one of the largest interest rates among the G7, a group of the world’s seven most significant “advanced” economies. The US and Europe are among the few countries to reduce interest rates in recent years; for example, the European Central Bank cut its main interest rate from 4% to 3.5% in September
Read the full article from The BBC here: Read More
Auto Amazon Links: No products found. Blocked by captcha.