Bank of England raises key rate to 0.75% in surprise unanimous vote

Possible Currency War A Risk To India's Growth RBI Governor

India's central bank today raised interest rates for the second time in less than two months, raising the prospects of further increase in loan interest rates.

Borrowers not on fixed-rate interest are likely to see an increase in their loan repayments, but the lender has to legally give you notice in order to do this, subject to the terms and conditions of your account.

Tej Parikh, senior economist at the Institute of Directors, said:"The Bank has jumped the gun with the today's rate hike". But the same market on August 1 slipped 85 points even though commentators said the second rate hike was on "expected lines".

Thirty-seven of 63 economists in a Reuters poll last week said the RBI will raise rates n Wednesday, while 22 said the next hike would come later this year, or early in 2019.

In a widely expected move, the Bank of England's Monetary Policy Committee has voted unanimously to increase Bank Rate to 0.75%. Truth be told, the central bank's monetary policy actions have kind of punctured the shallow rate-hike regime theory propagated by the pundits of share-bazaar when the first rate-hike happened in June.

Reverse repo, the rate at which the RBI borrows money from commercial banks within the country, was adjusted to 6.25 per cent. At the turn of the interest rate cycle, deposit rates went up by 25-50 bps in one go, public sector bank executives said.

"Whilst costs for Scottish households with variable interest rate mortgages will rise, the overall cost of borrowing remains low by historical standards".

Experts say those with a £200,000 mortgage will see a hike of about £25 a month - or £300 a year.

He said "limited" and "gradual" increases were required to bring inflation down to its 2 per cent target now that the United Kingdom economic growth appeared to be picking up again.

In the minutes of the MPC's meeting, the Bank said: "Recent data appeared to confirm that the dip in United Kingdom output in the first quarter had been temporary, with momentum recovering in the second quarter".

Driving these decisions are signs that inflationary pressures that have mostly lain dormant for years are strengthening as the global economy enjoys a robust, if uneven spell of growth, led by a booming U.S. Figures released Thursday by the Organization for Economic Cooperation and Development showed global inflation hit a four-year high in June.

"As a effect of that, a disruption to the level of economic activity, higher prices for a period of time". An annuity, which guarantees an income for life, rises in value alongside any interest rate rise.

It said, various indicators suggest that economic activity has continued to be strong.

While deals directly tied to the base rate will change, several providers have said they are still mulling over how they plan to apply the base rate increase to other products - leaving many savers holding their breath. The mistake they made was cutting rates in response to the Brexit vote.

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