Interest rates will “almost certainly” be held steady for a third time in a row by the Bank of England, economists have predicted.
The final Bank of England Monetary Policy Committee (MPC) meeting this year, on Thursday December 14, is expected to show a relatively stable end to a dramatic year for borrowing costs.
The central bank had hiked interest rates – which help dictate mortgage rates set by banks – in 14 consecutive meetings until they peaked at 5.25%.
However, the MPC held rates in the September and November meetings after witnessing a notable cooling in the rate of inflation.
Martin Beck, chief economic adviser to the EY Item Club, said little has changed since the previous decision to bring about a different result.
“December’s MPC meeting will almost certainly prove the third in succession to deliver no change in interest rates,” he said.
“There’s been nothing in the way of significant economic surprises over the last four weeks and inflation and pay growth have slowed (the former by more than the Bank of England expected).”
Brits have been battered with interest rates hiked over previous years and now no longer have confidence that things will get better soon, according to a study.
The public believes that inflation will still be too high in late 2028, a Bank of England survey has revealed.
The Bank of England/Ipsos Inflation Attitudes Survey suggests that the public doubts the Bank’s ability to bring inflation down to the 2% target. When asked what they expect the rate of inflation to be in five years from now, respondents gave a median answer of 3.2%.
When is the next interest rates announcement?
The nine-member MPC will next meet on Thursday December 14 to decide what level interest rates should be set at. The committee reveals its decision about interest rates every six weeks, alongside the factors that have led to the verdict.
While the committee decided to keep the base interest rate at 5.25 per cent twice in a row, that doesn’t mean its decision will be the same this week.
Will interest rates go up?
Homeowners, house hunters and City traders will all be looking toward the Bank of England this week for any clues on when interest rates might start to fall, with a busy run of influential numbers leading up to the last set-piece decision of 2023.
Due at noon on Thursday, it is all but certain to keep the base cost of borrowing on hold at 5.25%. It would be the third consecutive time at which it has stayed steady.
But with inflation at 4.6% and seemingly falling consistently toward the BOE’s official 2% target from its peak over 11%, speculation is growing in the City over when a cut will be on the cards. And the market is betting that there will be more than one cut by the end of next year, starting in the first half of the year. But they are unlikely to start quite yet as the BOE’s governor, Andrew Bailey, has signalled that rates will have to stay higher for longer.
Find out more about why interest rates rise in our guide.
Since December 2021, the Bank of England had increased the base rate from 0.1 per cent to more than five per cent in 14 consecutive rises.
