Interest rates rise to 0.75%
Bank of England increases interest rate to 0.75% - the highest since the start of the pandemic
- (opens in new tab)
- (opens in new tab)
- (opens in new tab)
- Sign up to our newsletter Newsletter

The Bank of England has raised interest rates to 0.75% as it warned the Ukraine conflict could see under-pressure households hit with double-digit inflation later this year.
It marks the third time in four months that the Bank has hiked rates.
The rate rise from 0.5% comes during a cost of living crisis, such as an increase in fuel and energy costs, with soaring inflation squeezing household finances.
Inflation is currently running at 5.5%, with big price increases seen at the petrol pump, in the supermarket and on many people’s energy bills.
This is well above the Bank of England’s inflation target of 2%. The Bank believes that inflation could reach 8% in the coming months, partly due to the war in Ukraine, which is pushing up “energy and other commodity prices including food prices”.
However, it also warned that if wholesale energy prices continue to soar, inflation could rise even further by the end of the year and potentially be “several percentage points higher” than the 7.25% peak that it forecast last month.
The Bank said: “The effects of Russia’s invasion of Ukraine would likely accentuate both the peak in inflation and the adverse impact on activity by intensifying the squeeze on household incomes.”
The Bank can raise interest rates to try and control inflation. Its Monetary Policy Committee (MPC) voted 8-1 to increase interest rates to 0.75%. The rise was widely expected by economists. However, rising mortgage costs for millions of households - as a result of higher interest rates - will hit them hard.
Annabelle Williams, personal finance specialist at the digital wealth manager Nutmeg, commented: “Although this is a small increase to interest rates which have been hovering close to record lows for many years now, many will be looking to see if the increase is passed on to consumers through higher savings rates.
“It’s a difficult time as people are finding more of their salaries eaten up by the rising cost of living, and those with variable-rate mortgages will likely feel the impact of the rate rise almost immediately.”
According to the financial website Moneyfacts.co.uk, none of the big high-street banks passed on the last two Bank of England rate rises to savers with easy-access accounts.
“As some of these rates are as low as 0.01%, it’s imperative savers reconsider their loyalty and switch away from these brands to something more attractive,” said Rachel Springall, finance expert at Moneyfacts.co.uk.
If a saver was lucky enough to have the 0.25% increase passed onto them, it would mean receiving £50 more a year in interest based on a £20,000 investment.
There are likely to be more interest rate rises from the MPC in the near future. The consultancy Capital Economics expects the committee to raise rates to 1% at the next meeting on 5 May, and for rates to peak at 2%, probably next year.
Additional reporting by PA
Ruth Emery is contributing editor at The Money Edit. Ruth is passionate about helping people feel more confident about their finances. She was previously editor of Times Money Mentor, and prior to that was deputy Money editor at The Sunday Times. A multi-award winning journalist, Ruth started her career on a pensions magazine at the FT Group, and has also worked at Money Observer and Money Advice Service. Outside of work, she is a mum to two young children, a magistrate and an NHS volunteer.
-
-
Average easy access ISA pays seven times the typical rate offered a year ago
Savers rejoice! The average cash ISA now pays around seven times the interest rate offered a year ago - while top one-year fixed ISAs now pay more than four times respectively
By Katie Binns • Published
-
Wrongful prepayment meter installation: could you be due compensation?
Prepayment meter customers may be in line for compensation after a scandal involving British Gas. We explain when can an energy firm can apply for a warrant to break into your home and install a prepayment meter
By Katie Binns • Published
-
What is Google Wallet?
Google Wallet is a service that allows Android users to buy goods with their mobile phone - and it’s not to be confused with Google Pay
By Katie Binns • Published
-
How to clear your student overdraft
What are the options open to graduates looking to clear their student overdraft?
By John Fitzsimons • Published
-
February 2023 Premium Bond winners revealed making two millionaires - how to check if you’ve won
February’s draw sees the 500th premium bond holder millionaire celebrating their win, along with hundreds of other lucky winners
By Vaishali Varu • Published
-
Surge in people searching for debt consolidation loans - could it help you?
Data shows people have started the new year with debt consolidation loans on their mind and are looking for ways to make repayments more affordable
By Katie Binns • Published
-
NS&I brings back one-year 4% fixed rate Bonds - its highest rate since 2010
NS&I brings back one-year fixed bonds that pay 4% - and there’s potential rates rises for half a million savers too
By Katie Binns • Published
-
Barclays to close another 15 branches this year - the full list
Barclays are closing a further 15 branches in addition to the 15 already announced in early January
By Vaishali Varu • Published
-
Zero-based budgeting going viral on Tik Tok - is it any good?
Zero-based budgeting has taken Tik Tok by storm with 12.8 million views, but will it work for your money and lifestyle when it comes to budgeting?
By Vaishali Varu • Published
-
What are interest rates?
It’s one of the main features to look for with any financial product is the interest rate, but what are interest rates?
By John Fitzsimons • Published