The interest rates of the United Kingdom will remain 4% to 2026 as persistent concerns about the economy, those responsible for formulating policies to act cautiously, according to economists.
The Monetary Policy Committee of the Bank of England (MPC) will announce its last decision on Thursday.
The central bank is expected to keep the rates to 4% after reducing them from 4.25% in August.
Economists believe that MPC can avoid reducing rates in meetings in November and December, which means that the figure could be kept waiting until February.
This would be a setback for mortgage holders, with millions that is still expected to refinance higher rates in the coming years.
Thomas Pugh, chief economist of the RSM UK audit firm, said: “It is almost guaranteed that the Bank of England will maintain 4% interest rates at its meeting on Thursday.
“The committee will adhere to its gradual and cautious guide, since it continues to balance the increase in inflation with a weakening labor market.”
Inflation of the United Kingdom consumer price index (CPI) increased to 3.8% in July, from 3.6% in June, which means that it remained at the highest level since January 2024.
This was largely driven by the increase in food and drinks prices, while general salary inflation has remained at 5%, according to the latest data from the National Statistics Office.
The MPC uses interest rates to control inflation and reduce the 2%objective.
The United Kingdom labor market has stagnated with the remaining unemployment rate in a maximum of four years and employment vacancies continue to decrease.
Philip Shaw, an investec economist, said he expected the rates to remain at 4% until the end of the year, and the next cut in February.
He said that recent economic data will be “unlikely to disperse the collective doubts of the committee about whether the inflationary coast is clear that the lightning of flexibility” in November.
Rob Wood and Elliott Jordan-Doak, economists from Pantheon's macroeconomics, said recent comments from the Governor of the Andrew Bailey bank indicated that he was happy with the prices of financial markets in just 40% possibilities for another rate cuts this year.
“The late budget will probably also encourage MPC to wait until December at least before considering another cut,” they said.
“We expect few changes in the MPC guide since August, given the Hawkish data flow and the comments of MPC members suggest little reason or desire to change their position in early August.”
In August, policy formulators emphasized future tariff cuts must be “gradually and carefully” in the midst of uncertainty about economic perspective.
Foreign Minister Rachel Reeves will deliver her autumn budget on November 26, and it is widely expected to increase taxes to balance the books.
