Interest rates UK – latest: Bank of England expected to confirm biggest rise in 33 years

More than 60 charities have written to the prime minister demanding more support for millions of UK households in fuel poverty.

A survey for the End Fuel Poverty Coalition suggests 76 per cent of people think the government is not doing enough to support vulnerable households this winter.

Despite the Energy Price Guarantee and the Energy Bills Support Scheme pledged by the government, 58 per cent of the population still believe they will struggle to pay their bills this winter, the poll indicates.

Analysts at Deutsche Bank have said they expect the Bank of England to opt for a 0.75 percentage point rise with a split vote.

Experts at the firm said they expect the latest forecasts from the Bank of England, which will also be revealed today, to show that “the economic outlook has deteriorated further”.

They added: “Conditioned on market pricing, the UK economy will likely fall into a deeper and more prolonged recession.”

The Bank will also confirm its inflation expectations for the longer term, which are due to show that the cost of living will be much higher than the central bank’s 2 per cent target next year.

James Smith, developed markets analyst at ING, also had a downbeat prediction for Bank’s latest economic outlook.

“The new set of forecasts due, which crucially are based on market interest rate expectations, are likely to be dismal – showing both a deep recession and inflation falling below target in the medium term,” he said.

“That should be read as a not-so-subtle hint that market pricing is inconsistent with achieving its inflation goal.”

Federal Reserve Chair Jerome Powell sought Wednesday to strike a delicate balance at a moment when high inflation is bedeviling the nation’s economy and commanding a central role in the midterm elections.

Powell suggested that the Fed may decide in coming months to slow its aggressive interest rate increases. Yet he also made clear that the Fed isn’t even close to declaring victory in its fight to curb an inflation rate that is near four-decade highs and has shown few signs of ebbing.

When the Fed ended its latest policy meeting Wednesday, it announced that it was pumping up its benchmark rate by a substantial three-quarters of a point for a fourth straight time.

Its key rate now stands in a range of 3.75 per cent to 4 per cent, the highest in 15 years.

If the Bank of England increases interest rates by 0.75 percentage points as expected, it would not only be the biggest single increase in 33 years but will also be the eighth time in a row that the Bank hikes interest rates.

Less than a year ago the rate was 0.1 per cent.

Earlier this month, markets had predicted the interest rate increase could be as much as one percentage point but sentiment has calmed somewhat after the change of chancellor and prime minister and Bank of England bond purchases pushed down on the cost of borrowing.

Markets have also witnessed a decreased appetite for large hikes globally, with the Bank of Canada increasing its interest rate by 0.5 percentage points, below the 0.75 percentage point rise which had been widely predicted.

Nevertheless, last month Bank of England governor Andrew Bailey said it was likely the hike in interest rates could be bigger than the 0.5 percentage point increase to 2.25 per cent seen at the previous meeting.

Renters and buy-to-let investors could be strongly hit by rising mortgage rates, with potentially serious impacts on the availability of homes to let, a committee of MPs has been told.

Chris Rhodes, chief finance officer at Nationwide Building Society told the Treasury Committee the buy-to-let sector had been particularly hit.

He said: “It’s marginally profitable for new buy-to-let investors if not loss-making to take on board a new property, so I think there are potentially implications there in the medium term for the sustainability of the buy-to-let market.”

Ray Boulger, senior mortgage technical manager at broker John Charcol added: “I think the buy-to-let market is where we’re likely to see a lot more stress than the residential market.”

Joanna Elson, chief executive of the Money Advice Trust, said: “And of course, the impact of that is on renters.”

Mortgage rates increased sharply amid market turmoil following the mini-budget and many products were pulled from sale.

With the Bank of England base rate predicted to rise today, the shadow chancellor will warn of “profound implications” for growth, with firms facing “desperately difficult decisions” over their future.

Rachel Reeves will also caution that families with already stretched budgets are in line for even higher mortgage payments.

She will claim the UK is uniquely exposed to economic shocks due to a failure to get an handle on years of “weak growth, low productivity and underinvestment and widening inequality”, with a need for a “new spirit of partnership” between Government and business.

Ms Reeves will also suggest the country is “falling behind” in the race for the “industries of the future”, pledging a “fairer, greener, more dynamic Britain” under Labour.

The Bank of England is expected to unveil the biggest interest rate rise since the 1980s today as it tries to control the runaway inflation that is battering British households.

In a crunch meeting, the nine members of the Monetary Policy Committee will make a decision that could push up the amount that millions of mortgage-holders have to pay their banks every month.

The decision is expected to push up the Bank’s base interest rate from 2.25 per cent to 3 per cent, the highest since 2008. Mortgages are decided against this rate.

If – as expected – the Bank raises interest rates by 0.75 percentage points, it would be the biggest single increase since 1989.