top of page

Interest rate remains at 5.25% - February 2024

The Bank of England has decided to keep its benchmark interest rate at 5.25%, marking the fourth consecutive time without change. However, a Monetary Policy Committee member's vote for a rate cut, the first since the pandemic, indicates a potential shift in policy as inflation nears the 2% target.


While borrowing costs remain steady, the Bank hinted at a changing stance, removing language about the need for further rate hikes from the minutes. The nine-member committee exhibited a rare three-way split, with one member voting for a cut, two for higher rates, and six for maintaining the status quo.


Investors anticipate rate cuts from mid-year, reaching just over 3% by 2026. Governor Andrew Bailey noted concerns about inflation but emphasised the timing for a rate cut hasn't arrived.


The report, published today, explained:

“We have raised interest rates over the past two years to help slow down price rises (inflation). It’s working. Inflation in the UK has fallen from a peak of 11% in 2022 to 4% in December 2023. 
But inflation is still above our 2% target. High inflation affects everyone, but it particularly hurts those who can least afford it. We need to make sure it comes down further.
We expect inflation to fall, though with some bumps along the way. It could briefly drop to 2% in the spring, before increasing slightly again. 
We will keep interest rates high for long enough to get inflation back to the 2% target in a lasting way.”

While two-thirds of the impact of higher interest rates have affected the economy, over two million households face upcoming mortgage rate increases. The Bank faces the challenge of balancing economic support, inflation management, and addressing household financial strains in future policy discussions.




Interest remains at 5.25%

Interest rate remains at 5.25%

25 views0 comments

Recent Posts

See All

Comentarios


bottom of page