Menu
10/06/2004
UK interest rates rise to 4.5%
Interest rates have been increased by a quarter percent to 4.5%, the Bank of England has announced today.
The bank's Monetary Policy Committee (MPC) said today that while inflation is below the 2% target, "cost pressures are rising".
Greater household spending, public consumption and investment, and a buoyant housing market all contributed to the MPC's decision.
"Against that background, the Committee judged that a further increase of 0.25 percentage points in the repo rate to 4.50% was necessary to keep CPI inflation on track to meet the target in the medium term," the committee said.
As indicated in the May Inflation Report, a small and diminishing margin of spare capacity means that inflationary pressures are likely to continue building, it added.
Reacting to the decision the CBI Director-General, Digby Jones, said that increase would have little effect on the housing market.
"Business accepts this latest rise as long as the motive is to ensure that interest rates peak at the lowest possible level," he said.
"But, consecutive rises do mark a shift from the gradualist, well signalled MPC policy of the past and will do little to control house prices, rising due mainly to lack of supply in the housing market, or the inflationary effect of wage increases evident in the public sector."
Lib Dem Shadow Chancellor, Vince Cable, claimed that today’s interest rate rise would cost an average first-time buyer £250 extra a year on their mortgage. If interest rates continue to rise, or house prices start to fall, many could find themselves in difficulty, he added.
"The Bank is caught between dealing with the weaknesses in the economy and curbing the house price boom," the Lib Dem frontbencher said.
"Gordon Brown must urgently address the failures that have allowed banks to lend irresponsibly and fuel unsustainable levels of debt."
The Tories said Gordon Brown's "spending spree" had forced the MPC to raise rates.
Shadow Chancellor Oliver Letwin said: "We are now approaching levels of interest which may prove uncomfortable to many people who have large mortgages or other borrowings.
"Given that household debt is on the verge of breaching the £1 trillion barrier, the combination of higher interest rates and high levels of debt is becoming a serious issue."
The previous change in interest rates was an increase of 0.25 percentage points to 4.25% on last month.
(gmcg)
The bank's Monetary Policy Committee (MPC) said today that while inflation is below the 2% target, "cost pressures are rising".
Greater household spending, public consumption and investment, and a buoyant housing market all contributed to the MPC's decision.
"Against that background, the Committee judged that a further increase of 0.25 percentage points in the repo rate to 4.50% was necessary to keep CPI inflation on track to meet the target in the medium term," the committee said.
As indicated in the May Inflation Report, a small and diminishing margin of spare capacity means that inflationary pressures are likely to continue building, it added.
Reacting to the decision the CBI Director-General, Digby Jones, said that increase would have little effect on the housing market.
"Business accepts this latest rise as long as the motive is to ensure that interest rates peak at the lowest possible level," he said.
"But, consecutive rises do mark a shift from the gradualist, well signalled MPC policy of the past and will do little to control house prices, rising due mainly to lack of supply in the housing market, or the inflationary effect of wage increases evident in the public sector."
Lib Dem Shadow Chancellor, Vince Cable, claimed that today’s interest rate rise would cost an average first-time buyer £250 extra a year on their mortgage. If interest rates continue to rise, or house prices start to fall, many could find themselves in difficulty, he added.
"The Bank is caught between dealing with the weaknesses in the economy and curbing the house price boom," the Lib Dem frontbencher said.
"Gordon Brown must urgently address the failures that have allowed banks to lend irresponsibly and fuel unsustainable levels of debt."
The Tories said Gordon Brown's "spending spree" had forced the MPC to raise rates.
Shadow Chancellor Oliver Letwin said: "We are now approaching levels of interest which may prove uncomfortable to many people who have large mortgages or other borrowings.
"Given that household debt is on the verge of breaching the £1 trillion barrier, the combination of higher interest rates and high levels of debt is becoming a serious issue."
The previous change in interest rates was an increase of 0.25 percentage points to 4.25% on last month.
(gmcg)
Related Northern Ireland Business News Stories
Click here for the latest headlines.
08 January 2004
UK Interest rates sticks at 3.75%
As expected, the Bank of England has decided to hold the base rate at 3.75% today. The Bank's Monetary Policy Committee (MPC) opted to hold the rate following a quarter point rise in December - the first rise in four years. However, analysts are continuing to warn consumers that rises are imminent in the year ahead.
UK Interest rates sticks at 3.75%
As expected, the Bank of England has decided to hold the base rate at 3.75% today. The Bank's Monetary Policy Committee (MPC) opted to hold the rate following a quarter point rise in December - the first rise in four years. However, analysts are continuing to warn consumers that rises are imminent in the year ahead.
04 September 2001
Bank likely to leave interest rate unchanged
The Monetary Policy Committee (MPC) of the Bank of England are likely to leave interest rates unchanged at 5 per cent. The Committee are due to begin their latest two-day meeting amid a spate of calls for another cut in the interest rate.
Bank likely to leave interest rate unchanged
The Monetary Policy Committee (MPC) of the Bank of England are likely to leave interest rates unchanged at 5 per cent. The Committee are due to begin their latest two-day meeting amid a spate of calls for another cut in the interest rate.
08 June 2006
UK interest rates stay at 4.5%
The Bank of England has today announced that interest rates will remain unchanged for the tenth consecutive month. However, while rates were again held at 4.5%, there are concerns that growing inflationary pressures may men that interest rates will be set to rise later this year.
UK interest rates stay at 4.5%
The Bank of England has today announced that interest rates will remain unchanged for the tenth consecutive month. However, while rates were again held at 4.5%, there are concerns that growing inflationary pressures may men that interest rates will be set to rise later this year.
07 March 2011
IMF Announce Interest Cut For Ireland
Despite an announcement to the contrary by the German Chancellor on Thursday, Ireland's bailout interest rate is set to decrease.
IMF Announce Interest Cut For Ireland
Despite an announcement to the contrary by the German Chancellor on Thursday, Ireland's bailout interest rate is set to decrease.
14 February 2002
Inflation rises but interest rates unchanged
The Bank of England Monetary Policy Committee (MPC) have decided not to raise interest rates at its monthly meeting, despite inflation warnings from the Office for National Statistics (ONS). The figures released by the ONS revealed an underlying inflation rate that exceeded the rates anticipated by the Bank of England.
Inflation rises but interest rates unchanged
The Bank of England Monetary Policy Committee (MPC) have decided not to raise interest rates at its monthly meeting, despite inflation warnings from the Office for National Statistics (ONS). The figures released by the ONS revealed an underlying inflation rate that exceeded the rates anticipated by the Bank of England.
-
Northern Ireland WeatherToday:A showery start with outbreaks most frequent north of Lough Neagh and through the morning, before dwindling during the afternoon as the northwest breezes ease and brighter spells of weak sunshine prosper. Maximum temperature 8 °C.Tonight:A dry night, save for a few light showers around the coasts, with prolonged clear spells and light winds bringing a frosty dawn for many in central and southern parts. Minimum temperature -3 °C.
