The Bank of England today raised UK interest rates to 3% from 2.25%, the biggest increase since 1989.
It warned that further increased might be needed in order to return inflation to its 2% target.
The bank expects inflation, which hit 10.1% in September, to peak at 11% in the final quarter of 2022.
The National Franchised Dealers Association said the increase would hit consumers but new car demand was high and rates were at historical low.
“Today’s decision by the Bank of England to raise their interest rates by 0.75%, to 3%, is likely to have implications on consumers spending habits, but automotive retailers should not be too concerned as rates are still historically low,” said NFDA CEO Sue Robinson.
“Raising interest rates will have an effect on people’s savings and mortgage accounts, and will also have implications for things such as bank loans and car loans.
“NFDA understands how crucial it is for the Bank of England and the Government to make every decision necessary to stabilise the current economy, but by raising interest rates it will make it harder for consumers to fund essential purchases such as cars required for mobility including commuting to work.
“However, cars are still a necessity to many and whilst the current new car market is facing well-documented supply side constraints, figures reveal that consumer demand remains buoyant, and NFDA believes this will continue through this latest rise in interest rates.”
