Economic news

BOE signaled of bigger and sooner interest rate hikes

The BOE has signaled that the hike of interest rates could pace up in case the economy keeps the trend. The Bank’s officials in a unanimous vote agreed to retain interest rates at the level of 0.5% during the last gathering.

But their message was that rate increase would be necessary earlier and at a greater degree than predicted in November’s review. The following lift of interest rates could take place already in May, experts believe.

The sterling’s value at first rose by nearly 1% versus the US currency, but later dropped to around 0.5%. Bigger interest rates have a great impact on people and the economy.

Some 8.1 mln Britain’s families have a mortgage, and around 50% of them are on a standard floating rate or a tracker rate. Thus these kinds of mortgages would probably be adjusted in accordance to the rates set by the BOE.

However, the measure by the Bank of England could be a benefit for savers because leading banks as a rule have to raise interest rates as well.

The previous hike by the BOE happened last November and it was the first case in over a decade, it grew from 0.25% to 0.5%. As the Bank’s forecasts said two other 0.25% increases could be expected in the course of three years.

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