Interest rates hiked by Bank of England by 0.5 percentage points in tenth consecutive rise
The Bank of England has raised UK interest rates by a further half percentage point to 4%, but gave its clearest signal yet that borrowing costs may now be nearing their peak.
This was the Bank’s tenth successive interest rate increase, but in the accompanying documentation, it hinted that there is a chance it might be the last for the time being, saying that it would only raise rates further “if there were to be evidence of more persistent [inflationary] pressures” than in its forecasts.
Those forecasts suggest that inflation has now peaked, and that it will come down gradually this year and next, eventually dropping beneath the Bank’s 2% target.
“I do see the signs that we’re turning a corner, and that obviously is encouraging but there’s a long way to go,” Andrew Bailey, governor of the Bank of England, told Sky News in an interview. “There’s still some very big risks out there.”
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BoE governor explains interest rate rise
“We’re going to take it each game as it comes and look at the evidence very closely,” he added.
In raising interest rates again, the Bank pointed to wages in the private sector rising faster than anticipated.
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Chancellor agrees on rate hike
There are widespread strikes this week in the public sector as workers fight for higher wages. Mr Bailey said the Bank would be keeping a close eye on developments in this area, as they could contribute further to inflation.
“What happens going forwards on wage setting will be very important and we’ll be watching it very closely because that will be an important indicator of whether the very sharp downward path of inflation will happen,” he said.
The Bank also upgraded its general forecast for the economy on Thursday.
While it still projects a technical recession this year, it would be a very shallow recession, with overall growth falling by 0.5% in 2023, compared with its November forecast of a 1.5% fall.
“If it emerges now, it’ll be the shallowest recession in a long long time,” Mr Bailey said.
Ed Conway analysis: It’s clear the Bank thinks we are – or near to – a peak in interest rates
Seven members of the nine-person Monetary Policy Committee supported the half percentage point increase, but two members – Swati Dhingra and Silvana Tenreyro – voted to leave borrowing costs on hold.
All were told that while the increase today is significant, the hints included in the Bank’s minutes represent a marked change in tone.
Previously it had said that it was ready to respond “forcefully” to higher inflation; this time, that language was removed.
Previously it had said further rate increases might be required if the economy behaved in line with their forecasts; this time it indicated that rate increases were dependent on higher inflation than in its forecasts.
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Chancellor Jeremy Hunt has said the Treasury supports the Bank of England’s decision to increase the interest rate to 4%.
The shifts in language leave the door open for some small further increases in borrowing costs but provide the firmest signal yet that UK interest rates are now at, or close to, their peak.
Outlook still weaker than in recent years
Still, while the outlook for the UK economy is better than in the Bank’s previous forecasts, it is nonetheless far weaker than in recent years.
While the average UK growth rate pre-financial crisis was around 2.5% and around 1.5% post-pandemic, the Bank expects underlying growth of just 0.7% in the coming years.
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Is Brexit to blame? The war in Ukraine? Ed Conway takes a look at why the IMF predicts the UK economy is behind any advanced nation this year
Moreover, because of the fall in national income projected this year, it now expects that the size of the economy will still be at 2019 levels in 2026 – a full seven years of lost growth.
Many other countries around the world have already exceeded their post-pandemic level; the UK, according to the Bank’s figures, is set to languish below it until the second half of this decade.
A spokesperson for the prime minister commenting on the figures said: “Inflation is the biggest threat to living standards in a generation, we support the bank’s action today. We will continue to take the decisions needed to reduce inflation.”
“This is a difficult time for mortgage holders in the UK. Inflation falling is not a given, it requires government to stick to the difficult decisions it has taken.”
On the subject of mortgage rates, Mr Bailey told Sky News that he was “hoping that we’ll see much more stability in the interest rate curve off of which mortgages are priced off.”
“That evidence is helpful, but there are a lot of people who don’t immediately benefit from that,” he added.
Liverpool have won the Premier League title after a 5-1 victory over Tottenham at Anfield.
Arne Slot’s men did it in impressive style, turning over Spurs in a convincing win.
It was a rocky start for the Reds after Dominic Solanke put the north London side ahead.
However, fortunes quickly changed in the first half as Liverpool scored three times without a response.
Captain Virgil van Dijk (centre) celebrates. Pic: Reuters
Salah on his knees in celebration after the final whistle. Pic: AP
Liverpool’s Harvey Elliott (below) and Jarell Quansah celebrate after full-time. Pic: PA
Slot cheers after the full-time whistle. Pic: AP
In the second half, it took until the 63rd minute for Mohamed Salah to make it 4-1 before a fifth followed.
The Reds have won the title in manager Arne Slot’s first season in charge, and move level with fierce rivals Manchester United on 20 league championships.
But it makes them arguably the most successful English club ever as they have won more European Cup or Champions League titles.
Liverpool captain Virgil van Dijk told Sky Sports after the final whistle: “It’s special and it’s something that we don’t take for granted. It’s amazing.
“A lot of emotions before the game, during the whole week, but we got the job done and we (are) truly deserved champions of England. (Liverpool is) the most beautiful club in the world and I think we deserve all of this. Let’s enjoy the next couple of weeks and let it sink in.”
Liverpool’s Kostas Tsimikas poses with a Premier League trophy cut out. Pic: Reuters
Manager Arne Slot and his team after the final whistle. Pic: AP
Slot took over last summer from Jurgen Klopp, who guided them to their previous and maiden Premier League title triumph in 2020, when the COVID-19 lockdown saw matches played behind closed doors.
He is the first Dutch manager to win the Premier League and the fifth man to do so in a debut campaign after Jose Mourinho, Carlo Ancelotti, Manuel Pellegrini, and Antonio Conte.
Speaking to Sky Sports he said: “They [the players] did an outstanding job today. The main job was to win. Everyone said we had got it already. But we had to make sure and we got over the line.”
Several players, including Alisson Becker, Trent Alexander-Arnold, Virgil van Dijk, and Mohamed Salah, played leading roles in both the 2025 and 2020 campaigns.
Van Dijk and Salah recently signed new contracts extending their careers at the club.
Mohamed Salah takes a selfie with fans after scouring the fourth Liverpool goal. Pic: AP
Fans at Anfield during the game. Pic: AP
Fans in the stands at Anfield before full-time. Pic: Reuters
Liverpool will have to wait until the final game of the season – at home to Crystal Palace on 25 May – to be presented with the Premier League trophy.
It will be the first time the club’s fans will have seen their side lift the top-flight title in person since 1990.
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Two pro-Palestinian demonstrators have thrown red powder on Tower Bridge – just moments before leading runners in the London Marathon went past.
The protesters were arrested on suspicion of causing a public nuisance and remain in custody, said the Metropolitan Police.
A video shared by Youth Demand, which is calling for a trade embargo on Israel, shows two people jumping over a barrier that separates spectators from the race course.
The pair, wearing t-shirts that say “Youth Demand: Stop Arming Israel”, are then seen standing in the middle of the road on the bridge.
Pic: LNP
They throw red powder in the air as an official marathon car goes past displaying the race time.
A motorbike with a cameraman on board continues along the route, while a second motorbike stops and one of the riders gets off and pushes the pair out of the way, just before the men’s elite runners pass.
Several police officers then jump over the barrier and detain the pair, the footage shows.
There appeared to be no impact on the marathon.
More than 56,000 participants were expected to take part in the 26.2-mile race through the capital.
Sabastian Sawe of Kenya won the men’s elite race in a time of two hours, two minutes and 27 seconds, while Ethiopia’s Tigst Assefa shattered the women’s-only world record in two hours, 15 minutes and 50 seconds.
Assefa beat the previous best of two hours, 16 minutes and 16 seconds set last year in London by Kenyan Peres Jepchirchir.
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Pic: LNP
The Metropolitan Police said in a statement: “At around 10.38am, two protesters from Youth Demand jumped over barriers at Tower Bridge and threw red paint on to the road.
“Marathon event staff intervened to remove the protesters from the path of the men’s elite race which was able to pass unobstructed.”
The force added that they were “quickly supported by police officers who arrested the protesters on suspicion of causing a public nuisance”.
The Met said the paint “appeared to be chalk-based” and was not expected to “present a hazard to runners yet to pass this point”.
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