The Bank of England is tasked with supporting a strong and stable economy, in part by setting interest rates at the right level. This guide explains some of the recent measures we’ve announced to help support the economy.
What is the Bank of England doing to support the economy?
What is the current level of interest rates?
The Bank of England sets ‘Bank Rate’, the single most important interest rate in the UK. Bank Rate influences other interest rates in the economy – including the lending and savings rates offered by high street banks. (For this reason it is sometimes referred to in the news as simply ‘the interest rate’.)
Bank Rate is currently 0.25%. Taking into account all the latest news on the economy, the Bank of England announced no change to Bank Rate on 2 February 2017.
There was also no change to the amount of quantitative easing, a tool that central banks like the Bank of England can use to inject money directly into the economy.
What measures did the Bank of England announce in August 2016?
Following the EU referendum, in August 2016 the Bank of England cut Bank Rate (sometimes called the ‘base rate’) from 0.5% to 0.25%. This was the first change to Bank Rate since 2009. Bank Rate influences other interest rates in the economy – including the lending and savings rates offered by high street banks.
Other measures were announced at the same time. These included further quantitative easing, a tool that central banks like the Bank of England can use to inject money directly into the economy.
All of these measures aim to stimulate the economy and help us to meet our target for inflation.
How are we supporting the economy after the vote to leave the EU?
What will happen next?
Depending on how the economy evolves, the Bank of England will take whatever actions are needed to meet our inflation target. You can find more information about recent developments and the outlook for economy in our latest Inflation Report, linked below.
Find out more: