The Bank of England’s monetary policy committee has held base rate at 5.25% for the sixth time in a row.
The decision comes as inflation, which measures...
Bank of England maintains interest rate
The Bank of England’s monetary policy committee has opted to maintain the base rate at 5.25% for the sixth consecutive time, in line with widespread expectations.
Despite some speculation within the industry, the decision to hold the rate was largely anticipated, particularly given the current inflation rate of 3.2%, well above the government's target of 2%.
Emma Wall, head of investment research and analysis at Hargreaves Lansdown, notes the absence of any clear indication from Bank of England governor Andrew Bailey regarding potential changes, suggesting that a lack of "forward guidance" implies stability rather than impending cuts.
However, Wall suggests that rate reductions are likely both in the UK and across Europe in the coming months. The recent unexpected rate cut by the Swedish national bank serves as a precursor to potential moves in the UK, potentially starting in June and extending thereafter.
Market data from Rightmove reveals a notable increase in mortgage rates, with the average five-year fixed rate surpassing 5% for the first time since January. Additionally, the average two-year fixed rate has risen to 5.41% from 4.84% a year ago.
A spokesperson for independent mortgage broker John Charcol emphasizes the ongoing uncertainty in the absence of a bank rate reduction. This uncertainty prompts market speculation and continual adjustment of forecasts, leading to a phase of repricing by lenders.
The spokesperson explains that lenders are constantly adapting their profitability margins in response to changes in funding lines and market competition, aiming to maintain competitiveness while managing financial risks.
Recent reductions in swaps indicate market anticipation of a rate reduction, potentially paving the way for lenders to adjust rates downwards in the near future.
