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Increased its bank rate to 2.25%

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  • In the September meeting, the Bank of England increased its bank rate to 2.25%. Its seventh consecutive rise and again increasing the rate by a significant amount (+0.5 percentage points).
  • Many UK borrowers are protected from any immediate increase by fixed rates (representing 94% of new mortgages*) but borrowing costs are rising for many existing and all new borrowers.
  • The Bank of England needed to take decisive action to ensure high inflation doesn’t become entrenched. The UK is certainly not alone in this; the Federal Reserve in the US also increased rates significantly this month, so too the European Central Bank.
  • Consensus forecasts, compiled by HM Treasury, suggest that UK inflation could be back to more normal levels for 2023 at 4.5%. Source: Dataloft, Financial Conduct Authority, Q1 2022 data, Federal Reserve, European Central Bank, Bank of England, FT

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