The Bank of England base rate or simply, Bank Rate, is the most important interest rate in the UK, set by our Monetary Policy Committee (MPC). This Bank Rate allows Government to stabilise inflation, keeping it low where possible.
Bank Rate affects interest rates on saving and borrowing – factors that are extremely important for mortgages, bank loans and much more.
Throughout the last year, Bank Rates have soared to some of the highest they’ve been since 2008, with the current bank rate standing at 5%. This decision was announced after the MPC meeting on 22 June 2023, increasing by 0.5% - this marks the 13th consecutive base rate increase.
The Bank of England rate decision worries many business owners that may have loans, mortgages or any other financial agreement that includes an interest rate. Due to the current financial climate, many small businesses are already struggling, and this spike in rates could be detrimental.
Changes in interest rates means that small business loans may become more expensive, and could also affect consumer behaviour as the general public may opt for saving rather than spending.
The next interest rate decision will be on 3 August 2023.