The next review is in August 2022.
The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment.
At its meeting ending on 15 June 2022, the MPC voted by a majority of 6-3 to increase Bank Rate by 0.25 percentage points, to 1.25%.
Those members in the minority preferred to increase Bank Rate by 0.5 percentage points, to 1.5%.
Responding to the Bank of England’s announcement that interest rates will rise from 1% to 1.25%, East Midlands Chamber chief executive Scott Knowles said:
“Many businesses will have been expecting yet another hike to interest rates to combat spiralling inflationary pressures, but this doesn’t detract from the huge unease they will be feeling about the direction of travel, as the Bank of England appears to be overseeing a prolonged period of aggressive monetary tightening.
“Against a backdrop of continued domestic and global headwinds that are causing a very real cost of doing business crisis – which we can see is now seriously affecting the economy with output falling by 0.3% in April – we should be backing firms to invest in order to make the productivity gains that will drive the growth we desperately need.
“By hiking interest rates, businesses face another barrier to spending as the price of debt accelerates. Our latest Quarterly Economic Survey for Q2 2022 showed that investment intentions in plant and machinery among East Midlands firms fell by 6% compared to the previous quarter.
“At the same time, intentions for investing in training – something of major importance during a time when four in five businesses attempting to recruit are struggling to find the skills they need – dropped by 3%.
“Declining business investment is a serious cause for concern and urgent Government action is needed to halt this fall. Cutting VAT on companies’ energy bills to 5% would ease the squeeze on their cashflow and give some room for manoeuvre.”
