Bank of England ‘set to hold’ interest rate today
Most experts believe Andrew Bailey and the Bank of England's Monetary Policy Committee will keep the base interest rate at 5.25% when a decision is announced today.
The Bank of England is expected to hold the base interest rate at 5.25% today with many experts saying it would be too early for a cut.
It decided in December to keep the rate at a 15-year high of 5.25% for the third consecutive time and a similar decision is widely expcted for this month even though there was a surprise increase in inflation during December to 4% from 3.9%.
Downwards
Most City analysts believe the inflation trend is firmly downwards, with some even saying the Government will reach its target of 2% by April.
Andrew Bailey, the Governor of the Bank of England (main picture), and Huw Pill, Chief Economist, are both believed to favour a hold in the rate, and most other members of the Bank’s Monetary Policy Committee are said to be the same.
Unchanged
The Times’ shadow monetary policy committee voted 8-1 in favour of leaving the base rate unchanged at 5.25% and only one member supported a lift in interest rates by 0.25% because ‘inflation remains high’. The newspaper also says the shadow MPC vote is likely to be replicated by the Bank.
Interest rate cuts
Several rate cuts are expected this year though, with most experts predicting this process will start in May or June.
A poll of 41 economists by The Times showed most predicted two reductions in the base rate, while nearly half actually said there would be three or more.
Slipped
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “Property sale transaction numbers slipped again in December in the face of higher borrowing costs and the cost of living, as borrowers reassess what they can afford to pay.
“Encouragingly, the direction of travel for new mortgage rates since then has been downwards, with fixed rates looking increasingly attractive. But borrowers must accept that they will pay considerably more now than in the heady days of sub-1 per cent mortgages.
“If the Bank of England holds rates again at the next meeting, this will further reinforce the belief that base rate has peaked and the next move will be downwards.”
