The Bank of England is expected to keep interest rates at the same level on Thursday as it continues to wait for more evidence that inflation is falling.
Financial markets predict the base rate will remain unchanged at 5.25 percent for the fifth time in a row.
It will be a welcome relief for homeowners who suffered 14 consecutive increases in 2022 and the first half of 2023 from 0.1 percent to the current rate, causing mortgage rates to rise sharply.
The Bank of England raised the rate so quickly to curb inflation, it shot up to 11 percent in 2022. The Bank of England's goal is to reduce inflation to 2 percent.
Members of the Bank of England's Monetary Policy Committee (MPC), which makes rate decisions, will be watching Wednesday's inflation figure, which is expected to fall to 3.5 percent, down from 4 percent. .
Last month, Andrew Bailey, governor of the Bank of England, said the 2 percent target would likely be reached in the spring and he wanted to see further sustained progress on service sector inflation, wage rises and the labor market. , before reducing interest rates. .
He told the Treasury Select Committee: “I think we have seen encouraging signs about them. So services inflation is still above 6%, and there are now some signs that it is coming down,” Bailey said.
“I think there are some signs that wages are adjusting downward toward lower headline inflation, which is what I would expect to see.
“The quantitative side of the labor market remains limited, there is no doubt about that. But it is the progress of those three things.
“We don't need inflation to return to target before cutting interest rates; I must be very clear about this: it is not necessary.
“We will look for sustained progress on those things to reach a judgment on how long this period of restrictive policy should last.”
Despite falling inflation, experts expect only one of the nine members of the Bank's interest rate-setting committee to vote in favor of a cut on Thursday.
Sandra Horsfield, economist at Investec, said: “The Bank of England's Monetary Policy Committee (MPC) will announce its next policy decision at midday next Thursday.
“The decision itself probably seems straightforward: at the time of writing, the market is pricing in only a negligible chance of a policy rate change next week. We agree and expect a stable bank rate of 5.25%.
“However, as at the last meeting, we believe that clear divergences of preferences within the MPC will persist: as in February (which was the first case of its kind since August 2008), we expect a tripartite split in the vote, with one “Members voted in favor of an immediate rate cut (Swati Dhingra), probably still two in favor of another increase (Catherine Mann and Jonathan Haskel) and the clear majority chose to make no changes.”
Sarah Coles, personal finance expert at Hargreaves Lansdown, told The Sun: “At the end of last year, markets were pretty convinced we would get a Bank of England rate cut in May or June, but sticky inflation early. of year. “It forced them to rethink.”
“At this point, May looks highly unlikely, June is in play and the market is increasingly expecting a rate cut in August.”
