Jim Armitage: The Bank of England is taking a pointless risk with the economy

Finally, the Bank of England has pulled the trigger. After weeks of will-they-won’t they, for the first time in 10 years, interest rates are up.

To a generation of twenty and thirty-somethings, this event is a leap into the unknown. Many first and second-time buyers have never known their loan rates to increase. Mortgage costs, credit cards, car finance deals have only ever fallen in their adult lifetimes.

The question now is, how will they react?

Will today’s rise terrify them into refusing to shop, cancel their holiday plans, postpone that house purchase?

Hawks will tell you, “No”: at a fractional 0.25%, the increase will not dent their wallets much overnight.

That may be true, but the message it sends for future interest rate moves is what matters. For all the dovish commentary about risks ahead, today’s vote — at seven to two — indicates the Bank’s sages are deeply uncomfortable with super-low rates.

This will greatly trouble younger rate-rise virgins, and worry older borrowers who remember when “normal” was 5% and more.

The impact on consumer spending — still the bedrock of our economy — will be harsh. And all for what? To keep a lid on inflation which most economists predict will begin falling soon anyway.

The Bank cut rates originally last August to counter the risks to the economy of Brexit. Those risks have not dissipated one jot: just look at the Bank’s own forecasts.

They should have kept rates where they were, well into next year.