Inflation and interest rates

Find out how changing prices can affect borrowing and saving

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What is inflation?

Inflation is when prices rise and how quickly they do so is called the rate of inflation. 

What are interest rates?

Interest is the cost of borrowing money or the reward for saving.

How do higher interest rates help to lower inflation?

Interest rates and inflation are closely linked. Higher rates will help to bring down inflation. But how exactly?

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What is happening with interest rates and how quickly might they fall?

If inflation stays on track, we should be able to make further, gradual cuts to Bank Rate

Why is your mortgage rate higher than Bank Rate?

The interest rate on your mortgage is usually much higher than Bank Rate.

How have prices changed over time?

The prices of some things we buy have gone up over time. But for others, prices have gone down!

What is deflation?

Falling prices are not always cause for celebration.

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