Biggest interest rate rise in 33 years … but smaller increases expected from here
On Thursday 3rd November 2022, the Monetary Policy Committee voted to raise interest rates by a further 0.75 percentage points to take interest rates in the UK to 3%. This is the biggest increase in 33 years to try and curb inflation.
- Only last month, the prediction was that UK interest rates would rise by 1 percentage point in November, so the increase is smaller than the housing market was previously expecting as sentiment has calmed after the change of Chancellor and Prime Minister.
- The HM Treasury Consensus Forecasts for 2023 anticipate inflation averaging 4.1% as a central scenario. Making a big change now should help limit the size of any further interest rate increases.
- Oxford Economics expects interest rates to continue to rise gradually from here and peak at 4% in 2024 before falling by a percentage point each year thereafter to 1.75% by 2027. Source: Dataloft, Bank of England, HM Treasury, Oxford Economics