The Bank of England has decided to keep the base rate at 5 percent, which may disappoint borrowers, especially home buyers. The Monetary Policy Committee (MPC) voted 8-1 to maintain the rate, with only one member advocating for a 0.25 percentage point cut. Despite the hold, the Committee has indicated a potential for future rate cuts. Financial experts are foreseeing rate reductions in November and December, hoping for no resurgence in inflation, currently hovering near the Bank of England’s 2 percent target.
Alice Haine, Personal Finance Analyst at Bestinvest by Evelyn Partners, expressed that households awaiting another rate cut would be let down by the Bank of England’s decision to maintain the benchmark interest rate at 5 percent. The MPC’s 8-1 vote to keep rates unchanged suggests consumers may have to wait longer before experiencing relief from high borrowing costs resulting from previous interest rate hikes.
Governor of the Bank of England, Andrew Bailey, hinted at forthcoming rate cuts later this year, noting the continued easing of inflationary pressures. The possibility of two more interest rate cuts before the year-end has instilled confidence among investors. Property experts like Eric Silvestre, Senior Investment Analyst at Wealthify, expect gradual rate cuts to support economic stability rather than a swift reversal of progress.
While some had anticipated further rate cuts, Peter Stimson, Head of Product at Mpowered Mortgages, pointed out that the Bank’s decision aligns with the current economic conditions. Despite the disappointment for borrowers, the trend of decreasing mortgage rates is expected to continue due to competition among lenders. The market remains optimistic about future rate adjustments and their impact on borrowing costs.
The Bank of England’s move to maintain the base rate reflects a cautious approach in balancing economic growth with inflationary concerns. As inflation is projected to rise in the coming quarter, all eyes will be on the BoE’s November meeting to gauge the likelihood of a second rate cut. The decision to hold rates steady aims to ensure long-term stability and confidence in the economy, considering various factors influencing the current financial landscape.