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BoE Insists UK Economy is Coping With Higher Interest Rates

The Bank of England (BoE) claimed on Wednesday that the UK economy is faring well in response to the central bank’s interest rate hikes over the past year and a half, before warning that it may take some more time for the full impact of the aggressive monetary policy to take effect.

While interest rates were at 0.1% at the start of 2021, the BoE has raised rates to 5% over the course of its fight to curb aggressive inflation. Despite the extreme hike, the bank assures that there is still no cause for alarm.

“The UK economy has so far been resilient to interest rate risk, though it will take time for the full impact of higher interest rates to come through,” the BoE stated before admitting, “Nevertheless, higher financing costs are likely to put pressure on some smaller or highly leveraged firms.”

Consumers such as mortgage holders are also experiencing the pressure of the bank’s interest rate hikes, especially with the average interest rate for new two-year fixed-rate mortgages rising to a 15-year high of 6.66% on Tuesday.

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