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The Bank of England has indicated that the pace of interest rate increases could accelerate if the economy remains on its current track. Bank policymakers voted unanimously to keep interest rates on hold at 0.5% at their latest meeting. However, they said rates would need to rise “earlier” and by a “somewhat greater extent” than they thought at their last review in November. Economists think the next rate rise could come as soon as May.

The value of the pound jumped by about 1% against both the dollar and the euro in reaction to the Bank’s comments. Higher interest rates have an important effect on households and the economy. Around 8.1 million UK households have a mortgage, and of those almost half are on either a standard variable rate or a tracker rate.

Interest rates on those types of mortgages would be likely to match any increase in official rates made by the Bank of England. But for savers a move higher by the Bank of England could be a bonus, as High Street banks generally have to raise their rates of interest.



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