- Bank of England expected to hold interest rates at 5.25% for 7th consecutive time
- It comes despite inflation reaching the central bank’s 2% target for the first time in three years
- Economists predict Bank will wait to see if inflation can remain at 2% over the coming months
- A potential rate cut is now more likely in autumn
Interest rates expected to be held at 5.25%
On Thursday, the Bank of England is expected to hold interest rates steady at 5.25% for the seventh consecutive time. Despite inflation reaching the central bank’s 2% target for the first time in three years, most economists do not foresee a rate cut. They predict the Bank will wait to confirm if inflation remains at 2% in the coming months, with a potential rate cut now more likely in the autumn rather than the summer.
This decision comes ahead of the general election, where economic policies will be a crucial point of contention. The recent drop in inflation to 2% in the year to May has led the Conservatives to claim their “difficult decisions” are yielding results. But Labour argues that financial pressures on families remain severe.
The Bank of England, independent of the government, aims to keep inflation stable at 2%. In recent years, the Bank has raised and maintained high interest rates to combat high inflation and alleviate the cost of living.