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What are interest rates – and what does the BoE’s decision mean?

Stay up to date with notifications from The IndependentNotifications can be managed in browser preferences.Jump to contentThank you for registeringPlease refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged inAllNewsSportCultureLifestyleThe Bank of England has held interest rates at 3.75 per cent (Gareth Fuller/PA) (PA Wire)The Bank of England has voted to hold interest rates at 3.75 per cent, following lower-than-expected inflation figures and the US-Iran peace deal.According to the Bank of England (BoE), for those “borrowing money, the interest rate (or lending rate) is the amount you are charged for doing so – shown as a percentage of the total amount of the loan.”While, for those saving money, “the interest rate (or savings rate) tells you how much money will be paid into your account, as a percentage of your savings”. In the UK, there is the so-called “Bank Rate”, which is set by the BoE. As noted on its website, this “is the rate of interest we pay to commercial banks, building societies and financial institutions that hold money with us. It is also the rate we charge on loans we may make to them. It, therefore, influences their own lending and savings rates.”Should interest rates increase, it could mean borrowing becomes more expensive. The BoE adds: “Whether you are looking to get a mortgage to buy a house, or a new car on credit, it is crucial to think about what higher costs mean for you.”In fullBank of England holds interest rates firm after UK inflation boostThank you for registeringPlease refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in

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