So I was keen to know if the Bank of England was going to increase interest rates, to try and halt the rise of inflation……. drumroll please….
They have agreed to keep them the same….. for now!
The minutes have yet to be announced but I doubt this decision was unanimous. The members of the Bank of England’s Monetary Policy Committee want to see official data in a fortnight on the impact of the end of the furlough scheme on the jobs market before they make any changes. I too will be interested to see what impact the end of furlough will have on the economy.
Interest rates are an important topic
Many people want to know if their future mortgage deals might be higher, but I specifically am looking to borrow money for upcoming home improvements and the potential of increased repayments could put a halt to our plans.
With the opening of the economy after Lockdown One, Two and Three, we have seen prices driven up. The surge in electricity and gas prices and continued business staff shortages and goods backlogs have driven prices higher, which I have to say, seems quite scary, when the Monetary Policy expects price rises to outpace pay increases over the next two years.
The inflation rates are currently higher than the Bank of England’s target of 2%. September saw inflation at 3.1% and it is expected to peak at 5% by next April. This is higher than it has been for a decade.
Should I be worried?
Three quarters of mortgage holders are on fixed deals – including me. We won’t see an immediate increase in our mortgage payments. I might be holding off on putting the heating on next winter… but I have hope in the fact that this is predicted to be only a temporary squeeze on household incomes. Only time will tell.
Do you want to know more?
If you have any pressing concerns or questions regarding the predicted increase in interest rates, please do not hesitate to contact us to arrange a chat with one of our Financial Planners.