When is the next interest rate announcement and how much could it rise?

From loans to credit cards and mortgage payments to bank savings, interest rate changes can affect many aspects of our financial life.

Whether rising or decreasing, interest rates can have both positive and negative effects on household finances.

When the Bank of England raises interest rates, which are also referred to as the ‘Bank Rate’ or ‘Bank of England base rate’, it can have serious consequences for individuals who have unpaid loans, especially for those who have tracker or variable mortgages.

The purpose of adjusting the Bank Rate is to influence the spending behaviours of individuals, ultimately impacting the overall economy. Lower rates aim to encourage borrowing and spending, while higher rates incentivize saving and reduced spending.

Current interest rate rises are designed to combat inflation, which (despite some recent decreases) is still running high at 8.7% – well above the government’s 2% target set for the BoE.

Even modest interest rate rises can sometimes see hundreds of pounds added to the monthly mortgage payments. During a cost of living crisis, many households will be particularly concerned about how much they will pay for their homes.

Many mortgage providers have now pushed rates above 6% for the first time since December.  

So, when is the next announcement on interest rates, and what could it be?

Here is what you need to know.

What is the current interest rate?

The current Bank of England base rate (bank rate) stands at 4.5%.

When is the next interest rate announcement?

The Bank of England is due to make a new announcement on interest rates on June 22, 2023.

How much could interest rates rise?

While nothing is certain, it has been widely reported that interest rates are expected to rise at the next announcement.

Julie-Ann Haines from the Principality Building Society recently told BBC Radio Wales’ Sunday Supplement: ‘Our expectation is that, unfortunately, we would expect the Bank of England base rate to be increased at the next three meetings of the monetary policy committee’.

While some commentators have called on the BoE to hold off on further rises, this seems unlikely.

Interest rate changes are endorsed by the BoE’s Monetary Policy Committee (MPC), and at its last meeting on May 10 2023, the MPC voted by a majority of 7 to 2 to increase Bank Rate by 0.25 percentage points to 4.5%.

This means that only two members preferred to maintain Bank Rate at 4.25%.

Generally, interest rates rise steadily rather than rapidly. The last two increases have seen a rise of 0.25%, rather than some of the larger 0.5% and 0.75% that were seen in late 2022.

Many experts expect another rise of 0.25% to 4.75%. However, Oxford Economics, an Independent economic advisory firm, warned a 0.5% percentage point increase is ‘not out of the question’.

Only time will tell.

MORE : All money changes still to come in 2023 – from interest rates to energy bills

MORE : What does the interest rate rise mean for my money? Our expert answers your questions

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