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.
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“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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10:03
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.”
Image: Officers held his arrest picture next to Kaddour-Cherif’s head to confirm his identity
In the footage, the Algerian was shown shouting to people standing nearby in the street.
An officer then held up a photo of Kaddour-Cherif on a phone, comparing the image to the man arrested.
When officers asked him whether he knew why he was being arrested, Kaddour-Cherif replied: “I don’t know.”
Kaddour-Cherif, who was wearing a grey hoodie, black beanie and black backpack, said the mix-up at the prison was the fault of the authorities who released him.
“It’s not my f***ing fault”, Kaddour-Cherif shouted.
Image: Kaddour-Cherif shouted at bystanders as officers arrested him
Image: Kaddour-Cherif claimed to be someone else when he was arrested
The Prison Service informed the Metropolitan Police about the error six days later – and a huge manhunt for him was launched.
It is not yet clear why it was nearly a week between the release at HMP Wandsworth and the police being informed that an offender was at large.
“At 11.23am on Friday, 7 November, a call was received from a member of the public reporting a sighting of a man they believed to be Brahim Kaddour-Cherif in the vicinity of Capital City College on Blackstock Road in Islington,” a Met Police spokesperson said.
“Officers responded immediately and at 11.30am detained a man matching Cherif’s description. His identity was confirmed and he was arrested for being unlawfully at large.
“He was also arrested on suspicion of assaulting an emergency worker in relation to a previous unrelated incident. He has been taken into police custody. The Prison Service has been informed.”
Image: Kaddour-Cherif shouted it was ‘not my f***ing fault’ that he was mistakenly released
Kaddour-Cherif is a registered sex offender who was convicted of indecent exposure in November last year, following an incident in March.
At the time, he was given a community order and placed on the sex offenders register for five years.
He was then subsequently jailed for possessing a knife in June.
Image: He was wrongly freed from Wandsworth prison. Pic: Met Police
Kaddour-Cherif came to the UK legally and is not an asylum seeker, but it is understood he overstayed his visit visa and deportation proceedings had been started.
He was accidentally freed five days after the wrongful release of convicted sex offender Hadush Kebatu. Both Kaddour-Cherif and Kebatu were arrested in Finsbury Park.
A third man, fraudster William Smith, 35, was mistakenly released from HMP Wandsworth on 3 November, but turned himself in on Thursday.
After Kaddour-Cherif’s arrest, Justice Secretary David Lammy admitted there was a “mountain to climb” to tackle the crisis in the prison system.
“We inherited a prison system in crisis and I’m appalled at the rate of releases in error this is causing,” he said.
“I’m determined to grip this problem, but there is a mountain to climb which cannot be done overnight.
“That is why I have ordered new tough release checks, commissioned an independent investigation into systemic failures, and begun overhauling archaic paper-based systems still used in some prisons.”
A young woman who claimed to be Madeleine McCann has been convicted of harassing the missing toddler’s family.
However, Julia Wandelt, 24, was cleared of stalking the couple.
A Polish national born three years after Madeleine, Wandelt said she suspected she had been abducted and brought up by a couple who were not her real parents.
She was having mental health issues at the time and had been abused by an elderly relative.
The relative looked like an artist’s drawing of a man who was once a suspect in the Madeleine case, which she stumbled across during internet research on missing children.
She went to Los Angeles and told a US TV chat show audience: “I believe I am Madeleine McCann.”
Madeleine was nearly four when she vanished from the family’s rented holiday apartment in Praia da Luz, Portugal, in May 2007.
She had been left sleeping with her younger twin siblings, Sean and Amelia, while her parents dined nearby with friends, making intermittent checks on the children.
Madeleine is the world’s most famous missing child, the subject of three international police investigations that have failed to find any trace of her.
Wandelt claimed to have a blemish in the iris of her right eye, like Madeleine’s, and to resemble aged-progressed images of her.
Image: Madeleine McCann went missing during a family holiday to Portugal in 2007. Pic: PA
Over three years, she attracted half a million followers on her Instagram account, iammadeleinemccan, and posted her claims on TikTok.
Police told her she was not Madeleine and ordered her not to approach her family, but she ignored the warning.
The McCanns and their children gave evidence in the trial at Leicester Crown Court, describing the upset Wandelt had caused them.
Her co-defendant, Karen Spragg, 61, from Cardiff, was found not guilty of stalking and harassment.
This breaking news story is being updated and more details will be published shortly.
Public safety is “at risk” because more inmates are being sent to prisons with minimal security, a serving governor has warned – as details emerge of another manhunt for a foreign national offender.
Mark Drury – speaking in his role as representative for open prison governors at the Prison Governors’ Association – told Sky News open prisons that have had no absconders for “many years” are now “suddenly” experiencing a rise in cases.
It comes after a man who was serving a 21-year sentence for kidnap and grievous bodily harm absconded from an open prison in Sussex last month.
Sky News has learned that Ola Abimbola is a foreign national offender who still hasn’t returned to HMP Ford – and Sussex Police says it is working with partners to find him.
WARNING: Some readers may find the content in this article distressing
Image: Ola Abimbola absconded from an open prison. Pic: Sussex Police
For Natalie Queiroz, who was stabbed 24 times by her ex-partner while she was eight months’ pregnant with their child, the warnings could not feel starker.
Natalie sustained injuries to all her major organs and her arms, while the knife only missed her unborn baby by 2mm.
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“Nobody expected either of us to survive,” she told Sky News.
“Any day now, my ex who created this untold horror is about to go to an open prison,” Natalie said.
Open prisons – otherwise known as Category D jails – have minimal security and are traditionally used to house prisoners right at the end of their sentence, to prepare them for integrating back into society.
With overcrowding in higher security jails, policy changes mean more prisoners are eligible for a transfer to open conditions earlier on in their sentence.
Image: Natalie Queiroz was stabbed 24 times by her ex-partner
“It doesn’t feel right, it’s terrifying, and it also doesn’t feel like justice,” Natalie said, wiping away tears at points.
Previously, rules stated a transfer to open prison could only take place within three years of their eligibility for parole – but no earlier than five years before their automatic release date.
The five-year component was dropped in March last year under the previous government, but the parole eligibility element was extended to five years in April 2025.
Raja, who is due for release in 2034, has parole eligibility 12 years into his sentence, which is 2028.
Under the rule change, this eligibility for open prison is set for this year – but under the new rules it could have been 2023, which is within five years of his parole date.
Another change, introduced in the spring, means certain offenders can be assumed suitable for open prisons three years early – extended from two years.
Image: Natalie says her ex-partner Babur Raja caused ‘untold horror’
Natalie has been campaigning to prevent violent offenders and domestic abuse perpetrators from being eligible to transfer to an open prison early.
She’s had meetings with ministers and raised both her case and others.
“They actually said – he is dangerous,” she told Sky News.
“I said to [the minister]: ‘How can you make a risk assessment for someone like that?’
“And they went: ‘If we’re honest, we can’t’.”
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The government told Sky News that Raja’s crimes were “horrific” and that their “thoughts remain with the victim”.
They also insist that the “small number of offenders eligible for moves to open prison face a strict, thorough risk assessment” – while anyone breaking the rules “can be immediately returned”.
Image: Mark Drury, a representative of the Prison Governors’ Association
But Mr Drury describes risk assessments as an “algorithm tick box” because of “the pressure on offender management units”.
These warnings come at an already embarrassing time for the Prison Service after migrant sex offender Hadush Kebatu was mistakenly freed last month.
In response to this report, the Ministry of Justice says it “inherited a justice system in crisis, with prisons days away from collapse” – forcing “firm action to get the situation back under control”.
The government has promised to add 14,000 new prison places by 2031 and introduce sentencing reforms.