The Bank of England raised the UK Base Rate to 0.5% on the 2nd November. Some younger readers may not have experienced a rise in interest rates in their working lifetime – the last occasion that Base Rates rose was on the 5th July 2007, going from 5.5% to 5.75%. Rates were slashed down to 0.5% after the Financial Crisis of 2008-09, and dropped once more to 0.25% after the EU Referendum. The Bank of England has now reversed the latter cut, as it wants to keep control of inflation. The UK economy has proved quite robust with high employment and reasonable growth, giving the Bank an opportunity to raise rates with less concern over hurting the economy. The Governor of the Bank of England, Mark Carney, has stated that he expects there to be two more rate rises in the next three years, bringing the Base Rate up to 1%. Whilst these increases will have an effect on the borrowing costs of those not on a fixed-rate deal, it should be remembered that lending rates remain at historically low levels, and look set to remain so for the time being.
