Interest rate hikes begin affecting households

Wednesday 25th October 2023 05:55 EDT

A Bank of England (BoE) policymaker has noted that the impact of the central bank's measures to control inflation has only just begun to affect households, and the repercussions will become more pronounced in the coming year.
In response to a recent slowdown in inflation, the BoE decided last month to maintain interest rates at 5.25 per cent. This decision to keep borrowing costs at the highest level in over 15 years came after 14 consecutive rate hikes driven by a surge in global inflation.
Dr Swati Dhingra, a member of the BoE's Monetary Policy Committee, has mentioned that interest rates are anticipated to remain elevated for an extended period, and this will have consequences, particularly on younger and less affluent households, in the year ahead.
In August, the UK's economy exhibited growth of 0.2 per cent, marking a turnaround from the 0.6 per cent contraction observed in July, as per data from the Office for National Statistics (ONS).
However, Dr Dhingra has indicated that the economy has essentially stagnated, despite this positive uptick.

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