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Israeli PM Office: Netanyahu has ordered that the Rafah crossing will not open until further notice.
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Araghchi: Iran adopted a constructive approach in its engagement to ensure the European Union and the E3 fully honored their commitments and lifted all sanctions.
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In his letter, Araghchi stated: The E3 failed to fulfill their obligations and instead imposed additional illegal sanctions on Iranian individuals and institutions.
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Iranian Foreign Ministry: Reimposing sanctions on Iran is illegal

Bank of England announces biggest interest rate hike since 1995

  • By Al Mayadeen English
  • Source: Agencies
  • 4 Aug 2022 14:12
3 Min Read

For the first time since 1995, the interest rate is elevated from 1.25 to 1.75 percent.

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  • Bank of England announces biggest interest rate hike since 1995.
    Bank of England announces biggest interest rate hike since 1995.

In an effort to combat the highest inflation rates in 40 years, the Monetary Policy Committee of the Bank of England (BoE) raised interest rates in the UK by 0.5 percent on Thursday, moving them from 1.25 percent to 1.75 percent. The Bank also updated its forecast, suggesting that rates will eventually reach 13 percent before declining.

The bank added that the United Kingdom faces a year-long recession from the fourth quarter.

Since Gordon Brown gave Threadneedle Street authority over interest rates in 1995, this widely anticipated hike represents the largest single increase in rates. Rates hitting 1.75% also marks their highest point since the global financial crisis in 1995.

The Monetary Policy Committee voted by a majority of 8-1 to increase #BankRate to 1.75%. Find out more in our #MonetaryPolicyReport: https://t.co/389XbdQZWf pic.twitter.com/OcqtaWjFuX

— Bank of England (@bankofengland) August 4, 2022

Prior to the rate increase, Rightmove predicted that an increase of 0.5% would result in new first-time buyers' monthly mortgage payments rising to an average of 40% of their gross income, a level not seen since 2012. For new first-time buyers, the typical mortgage payment would rise to more than £1,000.

“First-time buyers trying to get onto the ladder are currently facing average monthly mortgage payments that are 20% higher than the start of the year due to rising interest rates and asking prices, and that’s assuming they’ve been able to overcome the hurdles to raise a large enough deposit,” said Tim Bannister, Rightmove’s Housing Expert.

Read next: UK: inflation reaches its highest since 1982

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He added that a new record first-time buyer asking price of £224,943 means that a 10% deposit for such a property is now “57% higher than it was ten years ago, while average salaries have only increased by 31%”.

However, Nathan Emerson, CEO of Propertymark, was less concerned:

“Buyers will be watching interest rates very closely, but the gradual nature of their upward trajectory from a historically low base is unlikely to be a factor that on its own has too much of an effect on the confidence of those who are serious about moving.

 

This is borne out by our own data which shows potential buyers registering with our member agents have outnumbered new property listings throughout the first six months of the year, and by seven to one in June alone. During the same period the Monetary Policy Committee has raised the base rate four times.”

Homebuyers were cautioned by Cecilia Mourain, Managing Director for Homebuying at Moneybox, to keep such rate increases in perspective. She added that while they can appear "daunting," there was a big fall in rates in 2020, and rates are still in line with the 10-year average.

“Where possible, aspiring homeowners need to dissociate as much as possible from what’s happening in the very short term, and try to focus on the long term benefits of home ownership. There will always be periods of recessions and then periods of growth, the key is to be in it for the long term,” she added.

On Wednesday, it was also made public that Liz Truss, one of the two remaining contenders for the position of future prime minister, had stated that, if elected, she would want to give the Bank authority over inflation. She claimed that “the best way of dealing with inflation is monetary policy… I want to change the Bank of England’s mandate to make sure in the future it matches some of the most effective central banks in the world at controlling inflation”.

Read next: Japan faces soaring price hikes as yen depreciates - Reports

  • England
  • Bank of England
  • inflation
  • London

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