The Bank of England has just announced that it will raise interest rates to their highest level since 2009. But what does this really mean?

This month’s growth sounds quite modest, 1% to 1.25%, but it is very important to understand what is happening in the UK in the context of the global energy crisis and 40 years of high inflation.

Here is how this change affects your life crisis and your daily life:

What is an interest rate?

Interest rates are the amount of money worth borrowing.

These numbers were much higher in the UK, but the financial crisis meant they fell to incredibly low levels to reduce the drop.

This number has been low for the past 13 years and has only increased to 2009 levels.

Inflation is the rate of price increases, so interest rates are used to offset it and curb inflation.

In essence, if borrowing money is more expensive, people will borrow less, which should stop sudden changes in the economy.

Why are interest rate fluctuations in June so important?

This is the fifth consecutive monthly increase since December by the Bank of England.

Interest rates are currently at their highest levels since 2009 after the financial crisis.

In fact, three of the nine committee members wanted to raise interest rates even more significantly, to 1.5%.

Not surprisingly, banks have raised interest rates.

In May, the ONS confirmed that inflation reached its 40-year high of 9%, so it makes sense that banks would want to stop lending.

The Bank of England also forecasts that the economy will contract by 0.3% in the second quarter of 2022 (April-June) and inflation will exceed 11% in the autumn (5% of the bank’s inflation target).

It previously showed that it expects the economy to grow from July to September. This will prevent a recession (this is when the economy contracts for the second quarter in a row).

Following the rise in interest rates, US interest rates rose significantly by 0.75% to offset rising inflation across the Atlantic Ocean.

Who will be most affected by this change?

Financial experts believe that people with variable or tracking mortgage rates will be hit the hardest by this change.

According to the BBC, the British Chamber of Commerce has also warned businesses struggling to recover following Covid lockdowns due to excessive cost pressure and labor shortages.

Some people think that there is still more work to be done.

“What the economy needs now is for inflation to peak and recede,” said Kitty Asher, chief economist at the Management Association. Looks like I’m just getting started.”

How does this really affect your life?

Homeowners with a typical follow-on mortgage now have to pay around 25-25 per month.

Anyone with a standard floating rate mortgage gets a 16 increase.

That may not sound like much, but looking back when banks first announced this additional interest rate increase, tracker mortgage users pay around 115,115 per month and are holders of variable rate mortgages.

There is no immediate change for three quarters of mortgage holders with fixed-rate operations.

Banks predict this will mean the recession can be averted in the fall, but the secondary spike in energy prices later in the year means living expenses will rise even more in October, so the economy will contract again.