- UK interest rates are expected to be held at 3.75% for a fifth time by Bank of England policymakers.
- The committee of five women and four men will announce their latest interest rate decision at 12:00 BST, with a hold the widespread expectation.
- The Bank rate is the MPC's primary tool for maintaining the rate of rising prices - inflation - at a target of 2%.
- The latest official figures show inflation in the UK was 2.6% in the year to June, down slightly on the previous month but still above its 2.3% target.
- The inflation rate is likely to go up in July, as millions of households in Scotland, England and Wales feel the impact of a 13% rise in domestic energy prices.
- Economists have said they still expect a majority of the Bank’s rate-setting committee to opt to keep the base interest rate at 3.75% despite attacks in the region and US threats reigniting some concerns over inflation.
- The Bank has previously predicted that inflation will rise back to 3.25% later this year as higher energy costs feed into household bills from July.
- Oil prices surged above 100 US dollars per barrel last for the first time since May, as attacks on shipping in the Red Sea and threats from US president pointed towards potential supply disruption in the region.
- Thomas Pugh, chief economist at RSM UK, said he believes oil prices will 'largely' steer the path of interest rates for the next year.
The Bank of England is poised to keep interest rates at 3.75% for a fifth consecutive time, as inflation concerns mount due to rising energy prices.13467
The Monetary Policy Committee (MPC) will announce its decision at 12:00 BST, with a hold widely anticipated.2
The latest data shows UK inflation at 2.6% for June, slightly below the 2.3% target, but expected to rise to 3.25% later this year as households face a 13% increase in energy costs.
Katie Horne from Flagstone remarked, “A new government finding its feet, and the situation in the Middle East becoming increasingly uncertain, mean that a hold on [the] base rate decision would be a welcome dose of stability.”
Despite the current stability, David Hollingworth from L&C noted, “A hold is still welcome, but market expectations will need to ease back before we can hope for a return to lenders cutting rates.”
The MPC's decision comes amid rising oil prices, which have surged above 100 US dollars per barrel, driven by geopolitical tensions in the Middle East. Thomas Pugh, chief economist at RSM UK, stated, “I believe oil prices will ‘largely’ steer the path of interest rates for the next year.”89
Economists predict a seven-to-two vote in favor of maintaining the current rate, reflecting a cautious approach amidst fluctuating economic conditions.
“The latest inflation figures show a slight decrease to 2.6% in June, but predictions indicate a rise to 3.25% later this year due to higher energy costs. Economists expect a seven-to-two vote in favor of maintaining the current rate, reflecting ongoing uncertainty in the Middle East and its potential impact on inflation.”
The Independent
Northwich Guardian
