Bank decision on interest rates this week
The Bank of England is expected to hold the Bank Rate at 3.75% again for fifth time in a row.
The Bank of England is widely expected to keep interest rates on hold again this week.
If the Bank’s Monetary Policy Committee (MPC) decides to keep the rate at 3.75% it will be the fifth time in a row they have done so.
Last month, the Bank held interest rates at 3.75% for the fourth consecutive time with a rate-setters voting seven to two.
Stubborn
It is widely expected that ‘a hold’ would be their call again, especially as inflation remains above the Bank’s 2% target.
That same scenario faces rate-setters this time, albeit with a recent dip in the inflation rate from 2.8% to 2.6%, a 15-month low.
Inflation is expected to rise again after a temporary drop, which makes any prospect of a reduction in the Bank Rate more unlikely.
With the Bank forecasting inflation to rise above 3% by the end of the year, a similar voting majority in the MPC for a hold is now being predicted.
Andrew Bailey, the Governor of the Bank of England, said earlier this month: “There was an expectation that we would cut rates this year. That was off the table in March, and it’s off the table at the moment.”
Uncertainty
The MPC doesn’t meet again after this week until mid-September, and there is much uncertainty around what the decision will be then.
Continued hostilities in the Middle East are also a major factor affecting economic indicators in Britain.
With this backdrop of inflationary pressure and oil price hikes, it seems likely that the Bank of England will hold rates again.
