UK borrowers looking to cut costs may have to wait a little longer at first Rate of interest Take a dip.
Bank of EnglandThe Monetary Policy Committee (MPC), which sets the level of UK interest rates, will announce its latest decision on Thursday.
However, economists are widely expecting the committee to keep rates at the current level of 5.25 per cent, which has remained in place since August last year.
This means that it may take some time for the pressure to appear the cost of living You start getting relief.
In the last meeting held in March, only one MPC member, Swati Dhingra, had voted in favor of a 0.25 per cent cut in rates, but the remaining eight members did not vote in favor of any change.
Philip Shaw, chief economist at Investec, said: “This broad direction shows that collectively the Committee is gradually moving towards a rate cut.
“However it does not seem that we are ready to bite the bullet just yet and the Bank Rate will remain at 5.25 per cent for the sixth consecutive meeting.”
He said it was possible that another MPC member would move to the “ease camp” and vote for the cuts on Thursday.
Interest rates are used as a tool to help reduce UK inflation, which has fallen sharply from high levels in 2022 when energy costs soared and the cost-of-living crisis was at its peak. But it was.
According to the latest official data, the consumer price index (CPI) inflation rate fell to 3.2 percent in March.
But experts suggested that two key economic indicators for the Bank of England – wage growth and services sector inflation – remain more stubborn.
Average wages continued to rise faster than the rate of inflation last month.
Andrew Goodwin, chief UK economist at Oxford Economics, said: “Data published in mid-April for services inflation and regular private sector wage growth have dashed any remaining hopes of any move in May.
“While both measures continue to decline, progress has been slightly slower than the MPC had anticipated, and they are currently running modestly higher than forecasts published in the February monetary policy report.”
He said there is likely to be an “unbiased decision” on whether the MPC decides to cut rates in June or August.
Investec’s Mr Shaw said he expected CPI inflation to fall to the target 2 per cent level in May, which would prompt the MPC to cut interest rates to 5 per cent at the next meeting in June.
HSBC economists are also expecting the first rate cut in June.
The Bank of England will shed more light on its predictions for the economy and the path of interest rates when it publishes the latest monetary policy report along with a rates decision on Thursday.
Meanwhile, America’s central bank, the Federal Reserve, said on Wednesday it was keeping its key interest rate at the same level and noted the “lack of further progress” toward reducing inflation.
Its Chairman Jerome Powell suggested that this meant prices could remain high for a longer period of time until there was strong evidence that price rises were slowing.
Additional reporting by the Press Association.