The Bank of England has raised interest rates above 0.5 per cent for the first time since March 2009, taking the base rate to 0.75 per cent.
The first hike in more than nine years comes after much anticipation from markets, which were pricing in a 90 per cent chance of a rate increase ahead of the announcement, but few specific signals from the Bank.
When the BoE’s rate-setting committee last met, three of nine members voted for a rise to 0.75 per cent. Notably, among those voting in favour of a hike was Andy Haldane, the central bank’s chief economist, who went against the majority for the first time ever.
Interest rates fell from 5 per cent to 0.5 per cent in the period between October 2008 and March 2009 when Britain was in the grips of recession. The base rate remained there until August 2016 when, in the aftermath of the Brexit vote, the Bank cut it again, to 0.25 percent. In November last year, the rate was brought back to 0.5 per cent.