UK interest rates: Bank of England announces interest rate decision after fall in inflation
Bank decision on interest rates comes a day after inflation fell to 2%
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Your support makes all the difference.Interest rates have been frozen by the Bank of England for the seventh consecutive month despite another drop in inflation.
Bank chiefs on Thursday held the rate at 5.25 per cent in another blow to workers, homeowners and borrowers.
It comes after official figures published on Wednesday showed that rising prices had fallen back to 2 per cent - the Bank’s target - for the first time in nearly three years, down from 2.3 per cent in May.
The latest inflation figures mean that prices are still rising across the country, but at a much slower rate than in recent years when households and businesses were being squeezed during the peak of the cost crisis.
After the fall in inflation, the Confederation of British Industry (CBI) said the stage was now set for the bank to cautiously cut interest rates in August.
CBI principal economist Martin Sartorius said on Wednesday: “Today’s data sets the stage for the Monetary Policy Committee to cut interest rates in August, in line with our latest forecast’s expectations.”
Pound edges lower against US dollar after rates deecision
The pound edged lower against the US dollar and the euro following the Bank of England’s rate decision.
Sterling slipped 0.2 per cent to 1.269 US dollars and was 0.1 per cent lower at 1.183 euros.
Rate freeze ‘disappointing’ - small businesses
In response to the latest Bank of England interest rate decision, Federation of Small Businesses (FSB) national chair Martin McTague said: “Yet again, the MPC has opted to stick instead of twist, a move which was widely predicted but which is no less disappointing for it.
“The high plateau rates are currently stuck at is now undermining growth as small firms struggle to access affordable finance to help them expand.
“Inflation is now back on target and holding off a cut in the base rate until a future date risks snuffing out tentative signs of a recovery in GDP, with the flat growth in April a warning sign.”
Interest rate freeze ‘no suprise’ - Quilter Investors
Lindsay James, investment strategist at Quilter Investors, said: “Though inflation hitting 2% marked a significant milestone, it is simply not enough to allow the Bank of England to declare job done.
“Instead, the monetary policy committee has opted to leave interest rates unchanged once more.
“While it will come as a bitter blow to the Conservative Party, this decision is no real surprise given month-on-month figures suggest inflation is unlikely to remain at 2% for long.
“It is instead expected to rise again later this year and ultimately settle between 2% and 3%.
“The Bank will be keeping a keen eye on wage growth, which remains around 6%, as well as services inflation, which has been taking its time in coming down and has continued to feed into elevated core inflation.”
ICYMI: How does inflation affect interest and mortgage rates?
UK inflation slowed to 2 per cent in May, dropping to its lowest level since July 2021, according to new official figures.
It has matched the target rate of inflation set by the Government and Bank of England after a slowdown in price rises over the past two years.
Full report:
How does inflation affect interest and mortgage rates?
Borrowers are crying out for help, but interest rate cuts might not come until November
Struggling homeowners are desperate for a long-anticipated cut in the cost of borrowing.
But with a change of government looking likely, the Bank of England might be tempted to wait as long as late autumn, says James Moore.
Read James’s piece in full here:
Interest rates are held again – and cuts might not come until November
ICYMI: No fall in interest rates despite inflation hitting 2% target, Bank of England announces
The Bank of England has declined to cut interest rates from their 16-year high – despite inflation finally falling to meet its target of 2 per cent.
Homeowners struggling with soaring mortgages will be forced to wait at least another two months for borrowing costs to fall, after the Bank’s nine-member Monetary Policy Committee opted on Thursday to hold the base rate at 5.25 per cent for the seventh consecutive month.
Full report:
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