UK Interest Rate Headlines
- The Bank Of England raises interest rates by 0.75%.
- The new rate of 3.0% is the highest since 2008 with The Monetary Policy Committee under pressure to get a grip on soaring inflation.
- Interest rate betting will again be on offer from the best betting sites.
What will the Interest Rate decision by the Bank of England MPC be in December 2022?
|December Interest Rate Decision||Betting Odds|
|Raise of Over 0.5%|| |
|0.5% Raise|| |
|0.25% Raise|| |
|No Raise|| |
- It looks as though the BOE is caught between a rock and hard place when it comes to what to do about interest rates.
- Inflation was around 10% in August and their main tool to reduce inflation is raising interest rates.
- The victims in a rise are businesses and those with variable rates of mortgages as it makes borrowing money more expensive.
- The forecast is that the rate could reach 4.75% by next year.
- The next Bank of England Monetary Policy Committee Metting is on Thursday, December 15th.
Betting On Interest Rates
You can now place a wager with the best-betting sites and exchanges on whether the Bank Of England will further raise the interest rate.
The interest rate was at 0.25% before being raised to 0.5% in February 2022, it is expected according to financial journalists and the bookies that the only place interest rates are going is upwards.
Interest rates in the UK have been historically low, however, those older readers may remember 1979 when Bank Of England base rates reached a whopping 17%.
The value bet was to oppose a raise at such generous odds, but it seems we are all heading for higher borrowing costs.
This raise will make mortgages and loans more expensive and could cause financial pressures for many of us.
You would have thought that because of COVID 19 spending has been less as we have been locked in our homes for long periods of time, and to a degree that has been true, however as we have come out of all restrictions goods and services have skyrocketed in price as companies look to claw back some of their losses that they experienced during the pandemic.
If you imagine that you work as a garage mechanic or bricklayer the goods and services you need to operate are costing more from your suppliers, you then charge more to your customers, who then want pay rises as their wages are not going as far, employers then have higher wage costs, those higher wage costs are then passed on to their customers and the circle is complete with everything costing more - that leads to inflation.
Add in Brexit alongside Covid with imported goods from the EU costing the country more and we have a perfect storm of inflationary events.
The Bank Of England tries to control this by raising the cost of borrowing, so the extra money you had is now swallowed up by higher monthly mortgage payments, stopping you from going to the garage or employing a bricklayer to build your extension.
|Bank Of England Raising Interest Rates ||Outcome|
|Borrowing Money Costs More||Less Money Spent on Cards and Fewer Loans Taken Out|
|Saving Rates Go Up||Saving Money Is More Attractive|
|Higher Monthly Mortgage Payments||You Had A Spare £100 Each Month That Goes|
|New Mortgages Cost More||That Nice House On The Corner Costs More - So You Stay Put|
|Overall Reduced Consumption||Lower Economic Growth - Prices Reduce As Businesses Look To Attract Customers|
|Less Money In Yor Pocket||Stay In More - Spend Less on Takeaways and Holidays|
UK Inflation To Hit 7.5% By July?
2022 looks like being an expensive year with inflation on the rise.
No one truly knows what percentage inflation will peak at, but betting exchanges had a new market based on 7.5%.
You could have backed YES in February 2022 and that bet has now paid out.
Historical Inflation Rate By Month
|Year||Jan||Feb||Mar||Apr||May||Jun||Jul||Aug||Sep||Oct||Nov||Dec||Annual Inflation Rate|
|2022||5.40%||6.10%||7.00%||7.8%||7.9% ||8.2%||8.8%||8.6%||8.8%|| || || || |
|2021||0.70% ||0.50% ||0.70%||1.50%||2.10%||2.50%||2.00%||3.20%||3.00%||4.10%||5.10%||5.40%||2.60%|