BoE projections show Bank Rate of 1% by 2020

Expectations for the path of Bank Rate have risen to 0.7% from 0.5% for Q4 2018 and to 0.9% from 0.7% by the end of 2019.

The MPC’s projections are conditioned on a path that implies a gradual rise in Bank Rate to 0.7% by the end of 2018 and 0.9% by the end of 2019, around ¼ percentage point higher than in the August 2017 Report.

The Bank also slightly increased its predictions for GDP growth in the near term, from 1.3% to 1.5% for Q4 2017.

CPI inflation is now expected to stay at around 3% until the end of the year, up from the 2.8% forecast in the August report.

Inflation is then predicted to fall to 2.4% by the end of 2018 and reach 2.1% by 2020.

The Bank of England's Monetary Policy Committee today increased the Bank Rate from 0.25% to 0.5% - the first rise in a decade.

The Committee vote by a majority of 7-2 to raise interest rates, with David Ramsden and Jon Cunliffe voting against.

Citing reasons for the rise in its minutes, the MPC noted that unemployment has fallen to a 42-year low, "domestic financial conditions are highly accommodative and consumer confidence has remained resilient".  

The MPC added: "In line with the framework set out at the time of the referendum, the MPC now judges it appropriate to tighten modestly the stance of monetary policy in order to return inflation sustainably to the target.

"All members agree that any future increases in Bank Rate would be expected to be at a gradual pace and to a limited extent."