Bank of England keeps interest rates at 5.25 per cent in relief for homeowners

by The Technical Blogs


The Bank of England has kept interest rates at the same level on Thursday as it continues to wait for further evidence that inflation is falling.

Ahead of Thursday’s announcement, financial markets overwhelmingly predicted that the base rate would remain unchanged at 5.25 per cent for the fifth consecutive time.

Click here for our live coverage of the interest rates announcement.

Homeowners suffered 14 consecutive increases in 2022 and the first half of 2023 from 0.1 per cent up to the current rate, prompting mortgages to rise sharply.

The BoE hiked the rate so quickly in order to curb inflation, which skyrocketed as high as 11 per cent in 2022. The BoE’s target is to get inflation down to 2 per cent.

Members of the Bank’s Monetary Policy Committee (MPC), who make the decision on rates, will have been pleased that inflation fell to 3.4 per cent on Wednesday, lower than the 3.5 per cent expected by analysts. It is the lowest level inflation has been at since September 2021.

Chancellor Jeremy Hunt welcomed the news on inflation on Wednesday

(PA Wire)

Official figures showed Consumer Prices Index (CPI) inflation was down from 4% in January, thanks to the cost of food and eating out rising more slowly.

Chancellor Jeremy Hunt hinted that the “decisive” drop in inflation could give him room to further reduce national insurance, but played down suggestions that this would mean pre-election tax cuts in an autumn statement.

Mr Hunt said on Wednesday: “Inflation has not just fallen decisively but is forecast to hit the 2% target within months.

“This sets the scene for better economic conditions which could allow further progress on our ambition to boost growth and make work pay by bringing down national insurance as we work towards abolishing the double tax on work.”

The better-than-expected figures has led economists to speculate that the Bank could start cutting interest rates later this summer, and that they could fall as low as three per cent by 2025.

Paul Dales, chief UK economist at Capital Economics, said on Wednesday, the day before the interest rates announcement: “Our view that inflation will fall below 2 per cent in April and then ease towards 1 per cent suggests the BoE may have to start cutting rates in the summer and reduce them to 3 per cent next year.”

More follows on this breaking news story….


Source link

Related Posts

Leave a Comment

Recent Posts

Pigeons swarm Las Vegas neighborhood, nesting at church Study finds adult female elk are badass and can’t be... Vacancy: some more elephants needed in the bush THE TECHNICAL BLOGS

Our Policies

Userful Links

Shop Stores

Copyright @2020  All Right Reserved - Designed and Developed by DSF SEO COMPANY