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UK raises interest rates for the first time in 10 years Watch

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    http://www.bbc.co.uk/news/business-41846330

    For the first time in more than 10 years the Bank of England has raised interest rates. The official bank rate has been lifted from 0.25% to 0.5%, the first increase since July 2007.

    The move reverses the cut in August of last year - made in the wake of the vote to leave the European Union.

    Almost four million households face higher mortgage interest payments after the rise, but it should give savers a modest lift in their returns. As well as many of the country's 45 million savers, anyone considering buying an annuity for their pension will also see better deals. The main losers will be households with a variable rate mortgage


    0.5% interest rate :woo:
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    Good to see it on the up!
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    (Original post by shadowdweller)
    Good to see it on the up!
    I should hope so considering it's been 10 years! Still 0.5% is horrible.
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    Awful news
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    (Original post by Ninja Squirrel)
    I should hope so considering it's been 10 years! Still 0.5% is horrible.
    As good as the BoE being independent is it is certainly part of the reason the rate remains so low with them being able to come up with excuse after excuse not to increase it for fear of something going wrong and them being blamed. The worst bit of it all is that it isn't expected to get to 1% for another 3 years.

    With the recession having been so significant, QE so deep and long, and rates so low with a massive increase in regulations low cost borrowing has been made the norm and central bankers are afraid of restricting the money supply again and increasing rates so they have their QE and rate drop tools available for the next recession (which we are overdue for based on historical averages). Over the last couple of years the slump in oil price causing low inflation has exacerbated the problems, when they would have probably increased the rate they didn't because they wanted to drive inflation up and a rate increase should have the opposite effect. While that was happening consumer debt started going up so then there are concerns that increasing rate means higher interest rates on that consumer debt and all the problems that come with that. You also have productivity issues lending them more excuses, or alternatively reasons to do it depending on how you look at it.

    Below is an interesting piece from BI about a speech given by a member of the MPC on how an increase in base rate would boost productivity with the down side being A LOT of jobs lost (1.5m is his estimate for the figures used) as the increased base rate causes low productivity businesses to fold due to affordable debt interest and a lot of businesses that do survive have to have increased productivity to survive

    http://uk.businessinsider.com/andy-h...flation-2017-3
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    Not a surprise, given the inflation rate following Brexit.
 
 
 
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