Bank of England to leave interest rates on hold as UK economy on brink of recession
Economists anticipate that the Bank of England will keep interest rates unchanged for the fourth consecutive time during its meeting this week on Thursday. The current interest rate is expected to stay at 5.25%, representing a significant increase from the 0.1% recorded at the end of 2021.
Despite a slight uptick in December, where the inflation rate reached 4%, overall inflation in the UK has generally been lower than the Bank’s earlier forecasts. In December’s meeting, six out of the nine members of the Monetary Policy Committee voted to maintain rates, with three supporting a potential rate hike.
Inflationary pressures have eased, and there are indications that the UK economy may have entered a shallow recession at the end of the previous year. Market expectations suggest that the Bank might start lowering interest rates in the first half of the year, possibly reaching 4% by the end of 2024.
Analysts anticipate a more cautious tone from the Bank, but without explicitly endorsing rate cuts. Positive economic trends, such as lower gas and oil prices and a stronger pound, could contribute to an improved economic outlook.
Similarly, the Federal Reserve is also expected to maintain its current interest rates this week, aligning with investor expectations.