Bank of England postpones interest rate decision after Queen’s death to allow for national mourning

The Bank of England is pausing its scheduled meeting while the nation is in mourning. Credit: PA

A widely expected rise in interest rates has been put on hold to allow for a period of national mourning following the death of The Queen, the Bank of England (BoE) has said. The Bank said that decision makers on its Monetary Policy Committee would not meet as scheduled next week. Instead the meeting, at which committee members were expected to hike rates again, will take place the following week, the Bank added. “In light of the period of national mourning now being observed in the United Kingdom, the September 2022 meeting of the Monetary Policy Committee has been postponed for a period of one week,” it said.

The Bank's governor, Andrew Bailey, has warned against high pay rises. Credit: PA

The new rates decision will instead be announced on 22 September.

In August, the Bank raised interest rates to 1.75% from 1.25% – the highest level since January 2009 - amid warnings of a looming recession over the winter.

Interest rates are usually raised when inflation - currently at 10.1% - starts to surge out of control as a way of bringing it back down to normal levels.

Inflation is the rate at which the prices of goods and services are rising. It directly impacts bills such as households' mortgage payments, and has knock-on effects for renters if landlords pass on the hikes to tenants.

The postponement of the announcement on interest rates follows decisions by several public bodies to change their plans for the coming week.

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The Office for National Statistics cancelled the publication of all data on Friday, while the Met Office has said it will only be posting daily forecasts and warnings during the 10-day mourning period. The Bank had widely been expected to hike rates at the next meeting, the latest in a series of increases.

Analysts at Deutsche Bank had said that rates were likely to increase by 0.5 percentage points to 2.25% – its highest since December 2008. Others at BNP Paribas said that “there are arguably compelling reasons to up the ante” and raise rates to 2.5% at the next meeting. They said that while energy bills may have been capped at £2,500 for the next two years by Prime Minister Liz Truss on Thursday, broader inflation still remains high for households and businesses alike.