By Ben Kerrigan-
The Bank of England has raised interest rates for the first time in 10 years.
The official bank rate has been lifted from 0.25% to 0.5%, the first increase of its kind 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.
The rise will have serious implications for four million households who face higher mortgage interest payments with this rise. The rise will however benefit saverss, who will look forward to higher returns from the rise .
As well as many of the country’s 45 million savers, those considering buying an annuity for their pension will also see better deals. Most households with a mortgage are on either a standard variable rate or a tracker rate.
Almost two million mortgage holders have not experienced an interest rate rise since taking out a mortgage, according to the Bank. The new interest rate level was determined by a panel of nine from the Monetary Policy Committee (MPC), who vboted on the increase. Seven of the nine voted for higher interest rates, pointing to record-low unemployment, resilient consumer confidence and rising global economic growth. Brexit is also said to have had an influential impact on the deicision to raise interest rates as investment slumps because of high uncertainty and low confidence among businessmen and business firms.
They claim growth cannot accelerate much more without causing prices to rise more quickly.
However, the MPC repeated previous guidance that future increases in rates would be at “a gradual pace and to a limited extent”.
The pound fell about 1% against the dollar and euro, as some investors had hoped to see hints of more rate rises. Sterling dropped more than a cent against the two currencies to $1.3120 and €1.1260 respectively.