Interest rates have been increased to 4.25% from 4% by the UK’s central bank to get inflation under control and following the increase in rates by US federal reserve bank, which now sits at 4.75% to 5%.
With the UK interest rates being lower than the US there will be pressure of the value of £, and yesterday the rate dropped by 1 cent to $1.22 to the £. Whilst the UK interest rates remain lower than the US overseas buyers around the world whose currencies are pegged to the $ (USE for instance) means that UK property prices remain an attractive investment because of the exchange rate. (See our previous article)
The Bank of England’s decision to lift rates for the 11th time in a row comes after figures showed the cost of living rising by more than expected. Inflation jumped to 10.4% in the year to February, despite predictions it would fall.
The rate rise comes amid lingering worries over the global financial system after two US banks failed.