Bank of England imposes ninth consecutive interest rate rise to tackle inflation
The Bank of England has revealed a 0.5 percentage point interest rate increase – its ninth consecutive rise as it maintains its battle against inflation.
The decision, by its monetary policy committee (MPC), took the bank rate to 3.5% – a fresh high not seen since the 2008 financial crisis.
The move, however, represented a slowdown on the 0.75 percentage point rise that was imposed last month after inflation had leapt to a 41-year high of 11.1% on the back of rising energy and food bills.
Thursday’s interest rate hike level was widely expected by economists and financial markets given the more recent easing in the consumer prices index (CPI) measure of inflation, to 10.7%, reported on Wednesday.
It matched the rate move announced by the US Federal Reserve on Wednesday evening while it was also followed by the European Central Bank, taking the eurozone central bank’s main deposit rate to 2% from 1.5%.
The voting on the nine-member MPC made for interesting reading as it was split three ways – with financial analysts saying that mixed messages were behind a fall in the value of the pound, by a cent against the dollar, to $1.23 (£1) after the vote.
Two backed no change while one, the economist Catherine Mann, sought a repeat of November’s hike. The rest including governor Andrew Bailey all supported the 0.5 percentage point rise.
While the latest inflation rate raised hopes that the core cost of living measure had peaked, the bank is still raising its interest rate because inflationary pressures remain in the economy despite its assertion the UK is already in recession.
Policymakers would have been concerned, for example, by separate data this week showing basic wages growing at their fastest pace since 2001, if the pandemic period is excluded.
“The labour market remains tight and there has been evidence of inflationary pressures in domestic prices and wages that could indicate greater persistence and thus justifies a further forceful monetary policy response,” the Bank said.
Rising Bank rates however, while good for savers on paper, will only add to borrowing costs in an economy already squeezed by rising prices.
Immediate pain for some homeowners
Those on tracker or standard variable rate (SVR) mortgage deals will feel the most immediate pain.
Financial information firm Moneyfacts said a Bank rate rise of 0.5 percentage points on the current average SVR of 6.40% would add approximately £1,509 onto total repayments over two years.
The rate rise is also likely to be reflected in fixed rate deals ahead – still recovering from the temporary mini-budget market mayhem of September.
The Bank warned in its Financial Stability Report earlier this week that the average mortgage repayment was to increase by £250 a month, placing more households at risk of default next year.
Financial markets see Bank rate hitting 4.6% over the next six months.
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Hunt: Economy ‘likely to get worse’
Rachel Springall, finance expert at Moneyfacts.co.uk, said: “This latest base rate rise will be disappointing news to borrowers who are already facing a cost of living crisis and recent turmoil surrounding mortgage interest rates.
“Consumers may breathe a sigh of relief to see fixed mortgage rates have started to drop in recent weeks and hope these rates will fall further.
“However, the cost to secure a new fixed deal is much higher than they may realise, as both the average two- and five-year fixed rates have increased by over 3% during the past year.
“The erratic behaviour in mortgage pricing makes it essential for borrowers to seek advice to scrutinise all the options available to them,” she wrote.
Chancellor Jeremy Hunt said of the Bank’s action: “High inflation, exacerbated by Putin’s war in Ukraine, continues to plague countries across the world, eating into people’s pay cheques and driving up food and energy prices.
“I know this is tough for people right now, but it is vital that we stick to our plan, working in lockstep with the Bank of England as they take action to return inflation to target.
“The sooner we grip inflation the better. Any action which risks permanently embedding high prices into our economy will only prolong the pain for everyone, stunting any prospect of economic recovery.”
Counter-terrorism police are investigating after an incident involving a crossbow and a firearm left two women injured in Leeds.
Police were called to Otley Road at 2.47pm on Saturday to reports of a “serious incident involving a man seen with weapons”, West Yorkshire Police said.
Officers arrived at the scene to find two women injured – and a 38-year-old man with a self-inflicted injury. All three were taken to hospital, with the man held under arrest, but their injuries are not believed to be life-threatening.
“Two weapons have been recovered from the scene, which were a crossbow and a firearm,” Counter Terrorism Policing North East said in a statement.
The incident happened on the ‘Otley Run’ pub crawl, with one venue saying it was closed for the evening due to “unforeseen circumstances”.
Officers guard one of the crime scenes
Officers inside the cordon in Leeds
Counter Terrorism Policing’s statement added: “Due to the circumstances surrounding the incident, Counter Terrorism Policing North East have taken responsibility for leading the investigation with the support of West Yorkshire Police.
“Extensive enquiries continue to establish the full circumstances and explore any potential motivation.”
Home Secretary Yvette Cooper described it as a “serious violent incident” and said she was being kept updated by police.
“Thank you to the police and emergency services for their swift response,” she said. “My thoughts are with the victims and all those affected by this attack.”
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Wrexham AFC have been promoted for the third season in a row.
The North Wales-based side has gone from the National League to the Championship in just three seasons, under its Hollywood owners Ryan Reynolds and Rob McElhenney.
Wrexham were second in the table and had a run of eight games unbeaten ahead of their match against Charlton Athletic on Saturday, which they won 3-0.
Wrexham’s James McClean lifts the League One trophy. Pic: PA
Wrexham’s Dan Scarr celebrates with the fans on the pitch after Wrexham won promotion to the Championship. Pic: PA
It is the first time any club has been promoted for three consecutive seasons within the top five tiers of English football.
The third oldest association football club in the world, Wrexham AFC was bought by Reynolds and McElhenney in 2020, and has since been the subject of a Disney+ documentary, Welcome To Wrexham.
Reynolds, wearing a Wrexham sweatshirt, and McElhenney were pictured celebrating each goal, and after the game, as the fans came onto the pitch at the SToK Cae Ras (Racecourse Ground) to celebrate the victory with the players.
Wrexham co-owners Rob McElhenney (L) and Ryan Reynolds and Ryan’s wife Blake Lively, before the match. Pic: PA
Both stars came onto the pitch after the supporters returned to the stands.
Speaking to Sky Sports, McElhenney praised those behind the scenes, referring to “so many that don’t get the credit they deserve, people who aren’t talked about”.
Reynolds said bringing success back to the club “seemed like an impossible dream” when they arrived in North Wales in 2020.
Wrexham’s Sam Smith celebrates in front of the fans after Wrexham won promotion to the Championship. Pic: PA
He put the three promotions down to “the coaching staff, the greatest dressing room” and an “all for one, one for all” attitude throughout the club, adding he was “speechless with their commitment and their emotion”.
As for the mouth-watering prospect of another promotion to the promised land of the Premier League, the pair agreed it was “for tomorrow”, before ending the interview with a joint mic-drop.
Veteran striker Steven Fletcher said, “as soon as I came to this club, I knew it was something special. We want to go again. We’ll reset in the summer, take a break and go again”.
“It has been a success.”
Just Stop Oil (JSO) insists it’s been “successful” – as its members ceremoniously hang up their orange high-vis vests during a march in central London.
Since the group formed three years ago, it’s drawn attention and criticism for its colourful, controversial protests, which ranged from disrupting sporting events to throwing soup on Vincent van Gogh’s Sunflowers, and climbing on gantries over the M25. It sprayed orange paint over Stonehenge, and cost police forces tens of millions of pounds.
Those days are now behind it; to the relief of many.
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As a few hundred activists marched through London on Saturday, blocking roads as they went; taxi drivers blared their horns and football fans shouted abuse from the pavement.
The PA News Agency filmed the moment a white minivan seemed to drive towards a group of protesters blocking the road.
Protesters shouted “I’m being pushed back!” to police, while the driver could be heard shouting “What about my right to get home?” to the officers gathered.
But JSO never set out to be popular. And it believes its tactics – though hated – have been successful; thanks to the new Labour government’s commitment to not issue new oil or gas exploration licences.
That’s why, it says, its ceasing direct action.
JSO hangs up its high-vis jackets in central London on Saturday
A washing line of high-vis jackets signifies JSO’s disbanding
“This moment marks the success of the JSO campaign – our demand was to end new oil and gas licences and that is now government policy.
“As a result of which four billion barrels of oil are being kept under the North Sea. The campaign has reached a natural end.”
Dr Oscar Berglund, senior lecturer in international public and social policy, disagrees that JSO is disappearing because it’s been “successful”.
He told Sky News policing strength and public perception might have more to do with it.
“They have very low levels of popularity. About 17% of the British population are kind of broadly supportive of what Just Stop Oil do. And that’s too low to recruit.
“It’s difficult to recruit members to something that is that unpopular, and then that a lot of people for good reason I think have kind of stopped believing in that kind of disruption as a means to achieve meaningful change.”
Group triggers specific new protest laws
One thing it did change is the law.
Policing commentator Graham Wettone tells us: “Obstruction of the highway, obstruction of rail networks for example, these are specific offences now.
“It’s given the police more tactics, more methods, more offences they can consider, even stopping and searching somebody who may have something to either lock themselves on or glue themselves to something.”
A JSO activist holds a picture of an imprisoned colleague
Emma Smart was held in prison for her activism with both Insulate Britain and Just Stop Oil.
“The high-vis might be going away,” she tells me, “but we aren’t.”
“These people aren’t going anywhere, we are still committed, dedicated, terrified by the failings of this government and governments around the world.”
JSO activists throw orange paint at van Gogh’s sunflowers
Orange smoke set off by JSO protesters at Stonehenge
She hopes for a time of reflection before it returns in a new form but says the need for climate activism is stronger than ever.
She also believes that while most people dislike JSO tactics, it still raises awareness of the cause and might even push people to more moderate campaign groups.
Just Stop Oil came behind other, similarly controversial climate campaign groups like Insulate Britain and Extinction Rebellion, and as it says goodbye, its disruptive methods have been seized upon by other organisations like the Pro-Palestinian Youth Justice.
The infamous Just Stop Oil orange vests might be going away, but the individual activists, their cause and campaign tactics feel here to stay.
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