Bank of England holds interest rates at 3.75%
View original at uk.finance.yahoo.comBank of England holds interest rates at 3.75% The Bank of England has left interest rates on hold at 3.75% as expected, but relief may be coming for UK borrowers within months…
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The Monetary Policy Committee will continue to face a delicate balancing act between supporting growth and preventing inflation from becoming entrenched, with the next rate cut expected in April
80% confidenceThe bank will have to act soon if it intends to cut, before the disinflationary window closes in the second half of the year
80% confidenceThe Bank of England is balancing signs of improving growth against stubborn inflation and has pushed pause on interest rate cuts
80% confidenceAs long as inflation remains above 3%, there will be concern among rate setters that price pressures could become more persistent
80% confidenceHeadline inflation will drop to 1.8% in April from 3.4% in December, taking it below the bank's 2% target
80% confidenceA rate cut in March remains firmly in the picture, with weakness in the labour market, falling energy and transport costs and cheaper Chinese goods potentially swaying more policymakers
80% confidenceRisks to inflation from weaker demand and a loosening labour market remain, and the risk of persistent inflation has become less pronounced
80% confidenceApril is the most likely time for the next rate cut, when the MPC will have a clearer view of 2026 pay awards and evidence of slack in the economy
80% confidenceThe combination of lower inflation ahead and continued softening of the UK labour market should reinforce the central bank's view that the path for monetary policy is towards a lower Bank rate, potentially as early as next month
80% confidenceInflation expected to decline to about 3% in January, February and March, then reaching level close to 2% target in April and staying there
80% confidenceOn the basis of the current evidence, Bank Rate is likely to be reduced further, though decisions on additional easing would become a closer call
80% confidenceInflation will fall sharply this spring, opening the door to two rate cuts by the summer
80% confidenceThe market remains positive following recent drops in the BoE base rate, with hope for further reduction in April
80% confidenceMajor central banks are pursuing increasingly divergent policy paths, with pressure for rate cuts in the US, a more patient stance in the eurozone and tighter policy in Australia
80% confidenceInflation will fall back to around 2% by the spring
80% confidenceNeither the US Federal Reserve nor Bank of England are quite done cutting rates this year, but we may have to wait a while
80% confidenceExpects rate cuts in March and June, a faster pace of easing than markets currently anticipate
80% confidenceComments from Andrew Bailey suggest the Bank rate is close to its neutral level, meaning markets should not expect many reductions this year
80% confidenceToday's rate decision was expected, but the close vote suggests cuts are not a matter of if, but when
80% confidenceThere should be scope for some further reduction in Bank Rate this year, all going well
80% confidenceWith the base rate staying at 3.75%, most existing mortgage holders won't see an immediate change, with those on fixed rates completely insulated and tracker/variable rate customers seeing stability
80% confidence