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| Version 2 | Version 3 |
|---|---|
| UK interest rates raised to 5.5% | UK interest rates raised to 5.5% |
| (10 minutes later) | |
| The Bank of England has voted to raise interest rates by a quarter of a percentage point to 5.5%. | The Bank of England has voted to raise interest rates by a quarter of a percentage point to 5.5%. |
| The increase, the first since February, takes the cost of borrowing to its highest level since 2001. | The increase, the first since February, takes the cost of borrowing to its highest level since 2001. |
| Analysts had widely expected the rise as the Bank battles to rein in inflation and cool consumer spending. | Analysts had widely expected the rise as the Bank battles to rein in inflation and cool consumer spending. |
| Business and employers groups accepted that the latest rise was "necessary", but added caution was needed in future so as not to slow UK growth too much. | Business and employers groups accepted that the latest rise was "necessary", but added caution was needed in future so as not to slow UK growth too much. |
| "The MPC (Monetary Policy Committee) has to be firm. But it is important not to overreact to transitory developments," the British Chambers of Commerce (BCC) said. | "The MPC (Monetary Policy Committee) has to be firm. But it is important not to overreact to transitory developments," the British Chambers of Commerce (BCC) said. |
| Inflation targeted | Inflation targeted |
| It added that the nine-member committee should take a wait-and-see approach on inflation, as the Bank itself expects the rate of price growth to slow later this year. | It added that the nine-member committee should take a wait-and-see approach on inflation, as the Bank itself expects the rate of price growth to slow later this year. |
| Big cuts in gas and electricity prices are now coming through and we can be confident that CPI inflation will fall back towards the 2% target Peter Spencer, Ernst & Young ITEM Club Q&A: Interest rates | Big cuts in gas and electricity prices are now coming through and we can be confident that CPI inflation will fall back towards the 2% target Peter Spencer, Ernst & Young ITEM Club Q&A: Interest rates |
| The Bank of England is due to release its quarterly inflation report next week. | The Bank of England is due to release its quarterly inflation report next week. |
| "There is a danger that concern over recent events would generate pressures on the MPC to go over the top and would result in damaging monetary overkill," the BCC added. | "There is a danger that concern over recent events would generate pressures on the MPC to go over the top and would result in damaging monetary overkill," the BCC added. |
| "UK disposable incomes are being squeezed, spending is set to decelerate and growth will inevitably slow." | "UK disposable incomes are being squeezed, spending is set to decelerate and growth will inevitably slow." |
| Manufacturing group the EEF said that while it accepted rates had to rise, future increases could leave the UK's fragile manufacturing recovery at risk. | Manufacturing group the EEF said that while it accepted rates had to rise, future increases could leave the UK's fragile manufacturing recovery at risk. |
| HAVE YOUR SAY If this is the start of a housing crash, then good John Alexander, Watford Send us your comments According to figures released just hours before the bank's decision, UK manufacturing output rebounded slightly in March. | |
| However, while the rise will be good news for savers, it could mean higher bills for homeowners, as it will add an extra £16 a month - on average - to a £100,000 mortgage. | However, while the rise will be good news for savers, it could mean higher bills for homeowners, as it will add an extra £16 a month - on average - to a £100,000 mortgage. |
| Rise 'enough'? | Rise 'enough'? |
| Looking ahead, experts are split on the future course of interest rates. | Looking ahead, experts are split on the future course of interest rates. |
| While some predict rates will rise at least as high as 5.75% in coming months, others believe the latest increase is "enough for now". | While some predict rates will rise at least as high as 5.75% in coming months, others believe the latest increase is "enough for now". |
| "Big cuts in gas and electricity prices are now coming through and we can be confident that CPI inflation will fall back towards the 2% target. That will give the bank some breathing space," said Peter Spencer, chief economic advisor to the Ernst & Young ITEM Club. | "Big cuts in gas and electricity prices are now coming through and we can be confident that CPI inflation will fall back towards the 2% target. That will give the bank some breathing space," said Peter Spencer, chief economic advisor to the Ernst & Young ITEM Club. |
| However, he warned that future "belt-tightening" from consumers would be needed in order to avoid future rate rises. | However, he warned that future "belt-tightening" from consumers would be needed in order to avoid future rate rises. |