The action we take to keep inflation low and stable is called monetary policy. Having high inflation for a long time would cause even greater hardship, especially for the least well-off and those in unsecure employment. But we must take this action to make sure inflation comes down and stays down. We know higher interest rates are hard for many people. Slower price rises mean a lower rate of inflation. When people spend less on goods and services overall, the prices of those things tend to rise more slowly. Together, these things mean there will be less spending in the economy overall. Higher interest rates also encourage people who can save to save rather than spend. Higher interest rates work by making it more expensive for people to borrow money to buy things. Some say it won’t tackle the causes of the inflation and it will only make the squeeze on household finances even worse. People have asked us why putting up UK interest rates will help. How does raising interest rates lower inflation? We know that this will make things hard for many people.īut we must act to lower inflation because low and stable inflation is vital so that money keeps its value and people can plan for the future with confidence. And some businesses will face higher loan rates. Raising interest rates means that many people will face higher borrowing costs. On Thursday, we raised our interest rate (Bank Rate) by 0.25% percentage points to 4.50%. It is also widely known as ‘the base rate’ or just ‘the interest rate’.īank Rate influences many other rates in the UK, including those you might have for a loan, mortgage or savings account. We raise interest rates in the UK by raising our interest rate, Bank Rate. It takes time for the full impact of these rises to work (about 18 months to two years). We’ve been raising interest rates for over a year now. The way we can do that is by changing interest rates. But we can make sure it comes back to that target. We can’t always stop inflation from going higher or lower than that. Raising interest rates is the tool we use to bring inflation down. But it said that sales would slow 'as we lap periods of increasingly strong growth'. The tech giant saw revenue rise to 29bn (£21bn) in the three months to 30 June, up from 18.69bn last year. It’s our job to make sure inflation comes down to our 2% target. Facebook has warned that it expects revenue growth to slow down 'significantly' in the second half of 2021. What is the Bank of England doing to help bring inflation down? News and publications Open News and publications sub menu.Option-implied probability density functions Gross Domestic Product Real-Time Database The PRA’s statutory powers and enforcement Money Markets Committee and UK Money Markets Code Greening our Corporate Bond Purchase Scheme (CBPS) Operational resilience of the financial sector Wholesale cash distribution in the futureįinancial market infrastructure supervision
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