Article
Article

Base rate latest: the Bank of England hikes it up to 5.25%

The Bank of England has raised the base rate by 25 basis points to 5.25%. This decision reflects the bank's stance towards inflationary pressures.

Bank of England Inflation Economy
Date published: 03 August 2023

This article is not advice. If you would like to receive advice on your savings and investments, consider speaking to a Financial Adviser.

Base rate latest: the Bank of England hikes it up to 5.25%

The Bank of England did not back down from raising interest rates to a new 15-year high today despite signs that UK inflation is finally starting to drop. Although they did slow down the pace.

What’s new?

In today’s Monetary Policy Committee (MPC) meeting, members were split, with six voting to temper the increase to 25 basis points. Two members favoured a repeat approach of 50 basis points while one backed a result of no change. After a quick tally, the Bank of England has now lifted the base rate to 5.25%.

With the Bank earlier indicating that they would keep a close eye on labour market conditions, trajectory of wage growth, and inflation of service pricing, it comes as no surprise to see further tightening in the monetary policy. In other words, an increase to the base rate was highly anticipated.

But as usual, there were deliberations aplenty in the weeks leading up to today’s meeting, with new inflation data at the core of the conversation. We already knew the UK was in sky high territory for interest rates, and inflation was much of the same. However, the latest release of figures from the Office of National Statistics (ONS) presented a much more promising picture, restoring hopes that finally we’re throttling down on inflation. June’s data saw consumer price inflation ease to 7.9%, down from 8.7% in May, but still well above the Bank’s target of 2%.

Although inflation is heading in the right direction, wages are still proving to be a sticking point. According to ONS labour market statistics, regular pay increased by 7.3% between March and May, compared to the same period last year. This represents the greatest increase rate for regular pay, which was also observed last month. According to the Bank of England it also suggests that ‘risks from more persistent inflationary pressures may have begun to crystallise.’

Read more: understanding inflation, the base rate, and GDP

Making the most of rising rates

Following this announcement, we should see other banks pass on higher rates. If you hold cash in the bank, rising rates gives you an opportunity to increase your interest income. And by doing so, you can also mitigate some of the inflation pressures you might be facing.

Bank applications and forms are often a chore, so many choose to stick with the same low-interest savings account. But cash deposit platforms, like Flagstone, mean you now don’t need to settle for less. With just one application and password, you can access a wide selection of new rates, savings accounts, and banks on the market – so you can move your money as soon as you see a better rate arise.

See how much you could be earning.

Use our cash deposit calculator

Related articles

Article
Article
10 Jun 2024
Why you should open multiple savings accounts

If growing and protecting your money is important to you, then adding a second, third, or fourth savings account to your portfolio is a good idea. Discover four reasons why you should open multiple savings accounts.

Read article
Why you should open multiple savings accounts
Article
Article
29 May 2024
Understanding inflation, the base rate, and GDP

Understanding economic factors can help you make more informed financial decisions to grow and protect your wealth. In this article, we explain some of the key economic elements that can influence the growth of your savings.

Read article
Understanding inflation, the base rate, and GDP
Article
Article
30 Apr 2024
Growing and safeguarding your savings - a guide

Actively managing your cash savings is the best way to achieve higher interest rates and protect what’s yours. Read on to learn the essentials of saving, and start making the most of your cash.

Read article
Growing and safeguarding your savings - a guide