Bank of England makes highest single increase of base rate in 33 years

The Bank of England’s Monetary Policy Committee (MPC) voted to increase the base rate by 75 basis points on November 3, the highest single increase in the past 33 years, now standing at 3%.

As the British Moneyfacts website reported, October 2008 was the last time the rate exceeded this figure, when it sat at 4.50%. Back then, it was promptly lowered by one and a half percentage points the following month.

This current decision came after a period of political volatility following the former Chancellor Kwasi Kwarteng’s mini-Budget and a month when inflation breached double digits once again.

Currently, annual inflation is at 10.1%, meaning a typical basket of goods and services 10.1% more expensive than one year prior. This was largely driven by the increased cost of goods such as food, with the Office for National Statistics (ONS) reporting that food staples like bread had increased by 7% within a year.

The Bank of England (BoE) expects inflation to fall only starting mid-2023.

The decision of the MPC after the US Federal Reserve made a fourth successive 75 basis point hike to its interest rate on November 2.

Meanwhile, the European Central Bank (ECB) made the same 75 basis point hike to its rate last week.