The Bank of England has raised the base interest rate from 1.25% to 1.75%. This decision represents the biggest increase since 1995 and is the sixth straight interest rate rise.
The Monetary Policy Committee (MPC) of the Bank of England, which meets to decide what policies to enact, made this decision to keep inflation in check.
MPC voted 8-1 in favour of the increase of 0.5%. Meanwhile, Silvana Tenreyro, an external MPC member and professor of economics at the London School of Economics, was the lone dissenter arguing for a smaller increase of 0.25%, suggesting the interest rate to only 1.5%.
UK inflation has been rising and is expected to soar to 10% in the coming months. The Bank of England does not expect the UK inflation to last very long with this latest interest rate increase.
Many economists and experts had forecasted this likely interest rate increase, and as a UK property expert, I have expected the same. I think that this hike would likely be the last if a recession is announced. If that does occur, interest rates will drop down again.
However, we should be cautious because inflation could double the target well into the following year. The Bank of England has also stated that the inflation rate will keep rising this year before we see any relief.
What does this mean for property investors? For now, my advice is to focus on cash flow, and that means putting up rents while you can. For more property investment education, book a chat with us today or call us on 02079236100.