KPMG: Bank of England ‘will cut interest rate four times this year’

The Bank of England (BoE) will cut its base interest rate four times this year, a major financial firm has predicted.

KPMG warns that without several rate cuts soon the UK economy will struggle to grow, a fact that it predicts will drive the BoE to take action multiple times.

Almost unanimous

The Bank held the base interest rate at 5.25% in its latest decision, with an almost unanimous vote.

Members of the Bank’s Monetary Policy Committee led by Governor Andrew Bailey (main picture) voted 8-1 in favour of keeping the current rate despite a falling inflation figure.

Inflation fell to its lowest level in more than two years at 3.4%, increasing the pressure on the Bank to cut the base rate.

Not yet

Bailey said it is “not yet” the time to cut interest rates, despite “further encouraging signs” that inflation is coming down.

The Bank has to be sure that inflation will reach the Government’s 2% target and “stay there”, he said.

Weakness

But KPMG says: “Delaying interest rate cuts could compound the ongoing weakness in the economy.”

Meanwhile, financial markets believe the Bank will lower the base rate three times this year, starting in June, The Times reports.

Last week was the first time that no members of the committee voted to increase interest rates since September 2021.

Nearly a million

In February, the MPC voted by a majority of 6–3 to maintain the rate at 5.25%. Two members preferred to increase the rate by 0.25%, to 5.5%. One member voted to reduce the rate by 0.25%, to 5%.

Nearly a million mortgage holders are expected to come off fixed mortgage rates this year.