The Bank of England (BoE) is poised to raise interest rates to their highest level since the last financial crisis nearly a decade ago.
Financial markets have predicted there is a 91 per cent chance the BoE’s Monetary Policy Committee (MPC) will raise interest rates from 0.5 per cent to 0.75 per cent today.
This would mark the highest level of rates since 2009, when they were dramatically reduced from one per cent to 0.5 per cent in emergency measures designed to prevent further damage to the economy amid the financial crisis.
It would also be the second interest rates rise in under a year, following a jump from 0.25 per cent to 0.5 per cent last November.
An interest rates rise would pile pressure on many consumers as borrowing costs and mortgage bills grow, leaving them with even less disposable income to put back into the economy, however around 45 million people with savings would stand to benefit.
“While the impact for most borrowers is likely to be modest, it’s important to note that household budgets have been under pressure for some time because wages have not been rising as fast as the cost of living,” chief economist at Nationwide Robert Gardner said.
The news has seen the pound drop 1.5 per cent against the Euro and around one per cent against the dollar.
Hargreaves Lansdown senior analyst Laith Khalaf said: “Thursday could be a hugely symbolic day if the Bank of England decides to raise interest rates above 0.5% for the first time since the financial crisis.
“However it doesn’t actually change too much on the ground. Markets are already expecting a rise, and from here on in, further hikes are going to be few and far between because UK economic growth is so fragile.
“We could see some reaction from sterling though, which has remained resolutely weak against the dollar, despite rising expectations of a rate rise.
“That probably reflects the fact that economic data hasn’t been resoundingly positive in the lead up to this interest rate decision, plus of course the prospect of a no-deal Brexit has raised its head in recent weeks.”