The BoE’s Monetary Policy Committee has decided to hold its base rate at 4.5%, citing global trade changes led by the US and a sluggish UK economy.
The Bank of England has today held its base rate at 4.5% just a month after cutting it by 0.25%.
This latest decision comes as global political jitters and national economic wobbles persuaded the bank’s Monetary Policy Committee not to take a further and riskier cut to interest rates.
At its meeting yesterday the MPC voted by a majority of 8–1 to maintain Bank Rate at 4.5%. One member preferred to reduce Bank Rate by 0.25 percentage points, to 4.25%.
Within its commentary just out, the committee say: “There has been substantial progress on disinflation over the past two years, as previous external shocks have receded, and as the restrictive stance of monetary policy has curbed second-round effects and stabilised longer-term inflation expectations.
“That progress has allowed the MPC to withdraw gradually some degree of policy restraint, while maintaining Bank Rate in restrictive territory so as to continue to squeeze out persistent inflationary pressures.
“Since the MPC’s previous meeting, global trade policy uncertainty has intensified, and the United States has made a range of tariff announcements, to which some governments have responded.
“Other geopolitical uncertainties have also increased and indicators of financial market volatility have risen globally. The German government has announced plans for significant reform to its fiscal rules.
“While UK GDP growth estimates have been slightly stronger than expected at the time of the February Monetary Policy Report, business survey indicators generally continue to suggest weakness in growth and particularly in employment intentions. In recent quarters, subdued activity has been judged to reflect both demand and supply factors.”
Factored in
Mortgage lenders have already largely factored in this base rate decision into their lending in recent weeks and, as the latest Rightmove mortgage tracker reveals, rates for fixed-rate home loan have, despite dipping on an annual basis, moved downwards by only small percentage points over the past week.
The tracker also reveals that only those with larger deposit are now accessing the best rate, an indication of risk appetite among lender.
Reported by The Negotiator
