The Bank of England is expected to hold the base interest rate at 3.75% when it announces its latest decision today.

Effects of the war in the Middle East, including a jump in inflation, will probably weigh heavily on the minds of the members of the Bank’s Monetary Policy Committee (MPC), (pictured).

With inflation last month running at 3.3%, well above the Bank’s 2% target, a cut in the Bank Rate would appear unlikely.

However, some commentators have speculated that an increase of 0.25% to 4% is possible.

Unanimous vote

The MPC voted unanimously in March to hold the rate, having been expected before the conflict started to reduce it.

A hold at 3.75% this week now feels very likely.”

Harriet Guevara, Chief Savings Officer at Nottingham Building Society, says: “A hold at 3.75% this week now feels very likely, but the bigger story is how much the outlook has shifted.

“Just a few months ago, markets were pricing in further cuts. Now, with the conflict in the Middle East driving energy prices higher and inflation expectations rising, markets are pricing that rates are more likely to go up than down, potentially reaching 4.25% by the end of the year.

Take stock

“On the mortgage side, the prospect of rate rises rather than cuts makes this an important time for borrowers to take stock,” she says.

“Whatever happens with the rate in the coming months, the people who tend to come out ahead – whether saving or borrowing – are the ones who act while conditions are in their favour, not the ones who wait and hope.”

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