Bank of England interest rate announcement this week - what could happen as inflation fails to fall
The Bank of England is set to release the new interest rate this week amid new figures that show inflation has failed to fall.
It comes after new figures from the ONS revealed that inflation has not changed, with the Consumer Prices Index remaining at 8.7 per cent in May - the same it was in April. This goes against the Bank's goal of dropping inflation and keeping it at 2 per cent.The main tool used by the Bank to bring down inflation is by raising the base rate. This increase would primarily be felt by mortgage-holders with a variable interest rate.
Why does the Bank of England change interest rates? The BoE raises interest rates to ensure that inflation is brought down. The Bank's Base Rate is factored by the country's economical situation and it is up to the Bank to decide what will bring down the rate of inflation over the next few years. While there is always a chance the interest rate won't change, it seems this is unlikely due to the new inflation figures. Many experts were predicting inflation to fall in May, partly due to the Bank's hardline increases, however this is not the case.
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