Bank of England edges towards an interest rate rise

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British interest rates are set by the Monetary Policy Committee (MPC) of the Bank of England. 8 people sit on the committee and they vote on whether rates should be changed or stay the same. They meet monthly and for several years the base interest rate has remained historically low at 0.25%.

At today’s MPC though it looks like the committee is shifting towards raising rates in the near future. The committee voted 5-3 to retain the current low rate but it seems some MPC members are starting to think a rise in the rate is required to curb inflation. The latest inflation numbers show a rate of 2.% which is much higher than the government’s 2% target.

Ian McCafferty, Michael Saunders and Kristin Forbes all voted in favour of a rise. In the previous two MPC meetings only Forbes had voted for an increase.

What does this mean for ecommerce and marketplace sellers?At the moment, not a great deal. But curbing inflation is important because it dents consumer spending power and that’s ad for retailers. It will also likely increase the cost of business borrowing but rates for that are nowhere near the base rate in any case.

We wrote about the potential problems of inflation earlier in the week: UK inflation could be a headache for marketplace sellers. But perhaps the biggest concern should be uncertainty. Inflationary pressure combined with a weakness of sterling could become a bigger economic worry in the months to come. We’ll see.

One Response

  1. Been saying that for 10 years. Rate rise wont affect inflation, because its not too much demand causing prices to rise. Its the fall in the value of currency on things people need to stay alive, like food for example.


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