Bank of England expected to keep interest rates intact

The Bank of England is expected to set interest rates at a meeting later today.

Most analysts expect the benchmark rate to remain at its current level of 4.75% when the decision is announced at 12:00 GMT.

This happened when inflation increased for the second consecutive month Up 2.6% in the year to November – pushing it further above the bank’s 2% target.

In November, Bank Governor Andrew Bailey said the path for rates would likely be “downward from here”, but he cautioned that the process would be gradual.

The Bank moves rates up and down to try to control inflation, which measures The pace of overall price growth.

The idea is that if you make it more expensive to borrow, people will have less money to spend. People can also be encouraged to save more.

This, in turn, reduces demand for goods and slows down the rate at which prices rise.

But it’s a balancing act – rising borrowing costs risk hurting the economy.

For example, businesses may borrow less, making them less likely to create jobs. Some may cut staff and reduce investments.

Monetary Policy Committee (MPC) of the Bank – a group of people Banks that set rates will cut rates by 5% to 4.75% in November. – Second cut in 2024.

However, rising prices, combined with Tuesday’s data, which showed faster wage growth, suggest the central bank may need to keep interest rates at their current levels for longer.

Paul Dales, chief UK economist at Capital Economics, a think tank, said November’s high inflation data made it very unlikely that interest rates would be cut on Thursday.

“There is almost no chance that the Bank of England will deliver an early Christmas present with another interest rate cut,” he said.

“This is particularly the case as domestic inflation pressures appear to be much stronger than the Bank expected.”

Capital Economics estimates that inflation will ease in December and then rise again in January.

But he estimates that by the end of next year, it will get closer to the Bank of England’s 2% target.

The bank’s base interest rate greatly influences the rates that high street banks and other moneylenders charge customers for loans as well as credit cards.

Lenders often “evaluate” the impact of a cap or cut on the base rate when deciding on their interest rates.

Mortgage rates are still much higher than they have been in the past decade.

The average two-year fixed mortgage rate is 5.04%, according to financial information company MoneyFacts. The average rate for a five-year deal is 4.14%.