The Bank of England (BoE) will announce a change to the Base rate today, having a direct effect on some people's finances.
The Bank may be under more pressure than during previous reviews following new inflation figures that reveal rates stayed at the same rate in May at 8.7 per cent. ONS chief economist Grant Fitzner said: “After last month’s fall, annual inflation was little changed in May and remains at a historically high level. The cost of air fares rose by more than a year ago and is at a higher level than usual for May.
“Rising prices for second-hand cars, live music events and computer games also contributed to inflation remaining high. These were offset by a fall in the cost of petrol. Food price inflation remains high, but the rate has eased slightly this month with costs rising more slowly than this time last year.”
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Today, the Bank will announce the new interest rate following a meeting which will presumably take place in the morning. Previous decisions have usually been announced from 12pm, therefore, we can expect the new interest rate to be announced anytime around midday.
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.
