Interest rates – live: Bank of England holds at 5.25% as Bailey says he will not bow to pressure to cut rates

Andrew Goodwin, chief UK economist for Oxford Economics, said: “The data published in mid-April for services inflation and private sector regular pay growth has likely extinguished any remaining hopes of a move in May.

“Though both measures have continued to fall, progress has been slightly slower than the MPC anticipated, and they are currently running marginally higher than the forecasts published in February’s Monetary Policy Report.”

He said it is likely to be a “close call” on whether the MPC decides to cut rates in June or August.

Higher interest rates are used as a tool to control inflation, which has fallen sharply in recent months.

The latest official figures showed that Consumer Prices Index (CPI) inflation slowed to 3.2% in March, as it edges closer to the Bank’s 2% target.

But economists think the Bank’s policymakers will want to hold out until they are more convinced that inflationary pressures have eased.

Homeowners coming off fixed rate mortgages faced huge rises in their monthly payments, latest figures have revealed, with the costs severely biting into household disposable income.

With the Bank of England base rate rising to 5.25 per cent in the summer of last year, families faced soaring mortagage rates with the average two-year fixed rate reaching 6.9 per cent.

The new rates meant many homeowners, especially those with large mortgages still to pay, faced challenging increases in monthly payments.

UK borrowers eager for costs to come down may have to wait a little longer before interest rates take a dip.

The Bank of England’s Monetary Policy Committee (MPC), which sets the level of UK interest rates, will announce its latest decision on Thursday.

However, economists are widely expecting the committee to keep rates at the current level of 5.25 per cent, which it has been held at since August last year.

Philip Shaw, chief economist at Investec, said: “This broad direction illustrates that collectively the committee is moving gradually towards a rate cut.

“It seems unlikely though to be ready to bite the bullet just yet and the Bank rate looks set to remain on hold at 5.25% for the sixth consecutive meeting.”

He added that it is possible that a second member of the MPC will switch to the “easing camp” and vote for a cut on Thursday.

Economists think the Bank of England’s policymakers will want to hold out until they are more convinced that inflationary pressures have eased.

Laith Khalaf, head of investment analysis at AJ Bell, said: “It is almost certainly too early for the Bank of England to pull the trigger on a rate cut right now, especially against the backdrop of a more hawkish US central bank.”

The US Federal Reserve said last week it was keeping its key interest rate at the same level and noted a “lack of further progress” towards lowering inflation.

It means rates could stay higher for longer until there is firmer evidence of price rises easing, the Fed’s chairman Jerome Powell suggested.

Mr Khalaf said the Bank is also likely to be influenced by the European Central Bank, which is widely expected to cut rates in early June.

“The other important factor is more inflation readings for April and May, where CPI could get very close to, or possibly even hit, the Bank’s 2% target,” he added.

“The closer the inflation dial gets to 2%, the greater the pressure on the Bank of England to take its foot off the brake and cut rates.

“Markets currently think it’s a coin toss whether we get a UK rate cut in June, but this rises to a three in four chance priced in by August.”

House prices are down and mortgage costs are up, writes James Moore. So how long will buyers and sellers need to wait before the market shows signs of life?

Britain’s housing market has turned hostile again, at least for sellers. The latest Nationwide index showed a surprise 0.4 per cent fall in April, the second month-on-month decline in a row.

A rival index produced by Halifax recorded a 1 per cent month-on-month fall in March, with the next update due next week. These indices can be volatile, but another fall would now be the betting favourite.

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Thanks to the Liz Truss mini-Budget disaster, the Conservatives can no longer claim to be the party of economic competence, writes Andrew Grice. But an election campaign based on the economy is still their best hope of avoiding annihilation:

Interest rates are used as a tool to help bring down UK inflation, which has fallen sharply from the highs hit in 2022 when energy costs spiked and the cost-of-living crisis was at its peak.

The rate of Consumer Prices Index (CPI) inflation fell to 3.2 per cent in March, according to the latest official figures.

But experts suggested that two key economic indicators for the Bank of England – pay growth and services sector inflation – have remained more stubborn.

Average wages continued to increase faster than the rate of inflation last month.

UK borrowers eager for costs to come down may have to wait a little longer before interest rates take a dip.

The Bank of England’s Monetary Policy Committee (MPC), which sets the level of UK interest rates, will announce its latest decision on Thursday.

However, economists are widely expecting the committee to keep rates at the current level of 5.25 per cent, which it has been held at since August last year.

This means that there could still be some time before the pressure of the cost of living begins to ease.