Bank of England to make interest rates announcement…

Bank of England to make interest rates announcement this week - what can we expect

The Bank of England (BoE) will soon announce its revision of the base rate, determining whether it will rise or not.

Any decision the Bank makes will have a major effect on other rates all across the country. The Bank's interest rate can have a direct effect on how much people pay on loans, mortgages, or savings accounts.

At the start of February, the Bank increased the rate by 0.5 percentage points, driving it to 4 per cent overall. They stated the decision was due to global consumer price inflation remaining too high accompanied by a struggling labour market.

The Bank will make its next announcement on Thursday, March 23. The decision will be a difficult one for the bank following growing fears of a global banking crisis.

Here's everything you need to know about the Bank's interest rates announcement this week...

Why does the Bank of England change interest rates?

The BoE raises interest rates to ensure that inflation is brought down. The Bank's Base Rate is factored by the country's economical situation and it is up to the Bank to decide what will bring down the rate of inflation over the next few years.

Will interest rates increase again?

It's impossible to say for certain what the Bank will decide. In February, the base rate rose by 0.5 percentage points while in December it also rose by 0.4 percentage points.

Recent turmoil in financial markets has led to a growing fear of a global banking crisis, with some experts predicting this will strongarm the Bank into not raising the rates. However, it could very easily go the other way due to an unexpected rise in CPI and the Bank's priority of driving down inflation.

Craig Erlam, a senior market analyst for OANDA, said the inflation figures came as a “crushing blow” for the Bank.

He said: “Whatever flexibility the Bank of England may have thought it would have on Thursday was wiped out by Wednesday morning’s inflation data and once more, the topic of conversation has shifted to whether 0.25 percentage points will be enough.”

What will happen to my money if interest rates go up?

Interest rates will have a direct effect on those with a loan or a mortgage with a variable interest rate. If the interest rate goes up, you may notice that the cost of your repayment will go up as well.

However, if you're on a fixed rate, you won't see any changes to your payments until the end of your fixed period. If you're concerned about how high your monthly payments could go up, you can use a mortgage calculator to better prepare yourself.

Furthermore, if your saving account pays interest, you might see interest rates on your savings going up.

When will interest rates change again?

The BoE reviews interest rates every six weeks. Because of this, we can expect another announcement in early May.

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