BORROWERS MAY HAVE TO WAIT UNTIL SUMMER FOR A CUT IN INTEREST RATES

Borrowers may have to wait longer to see interest rates come down as Bank of England chiefs look set to hold out for stronger signs that the cost-of-living crisis has abated.

The Bank's Monetary Policy Committee (MPC) will announce its latest decision for interest rates on Thursday.

Economists expect them to be kept at the current level of 5.25 per cent, which it has been held at since August last year. It means borrowers could have to wait longer before pressure starts to ease.

At the last meeting in March, just one member of the MPC, Swati Dhingra, voted for rates to be cut by 0.25 percentage points, but the remaining eight members voted for no change.

Philip Shaw, chief economist at Investec, said: 'This broad direction illustrates that collectively the committee is moving gradually towards a rate cut. It seems unlikely though to be ready to bite the bullet just yet.'

He added that it was possible a second member of the MPC will vote for a cut.

Interest rates are used as a tool to help bring down inflation, which has fallen sharply from the highs of 2022.

The rate of Consumer Prices Index inflation fell to 3.2 per cent in March. But experts suggested two key economic indicators for the Bank of England – pay growth and services sector inflation – remain high.

Average wages continued to increase faster than inflation last month.

Economists at HSBC believe the first rate cut may come in June.

The Bank of England will shed more light on its economic predictions and the path of interest rates when it publishes the latest Monetary Policy Report alongside its decision on Thursday.

Meanwhile, the US Federal Reserve said on Wednesday that it was keeping its key interest rate at the same level and noted a 'lack of further progress' towards lowering inflation.

2024-05-05T23:27:55Z dg43tfdfdgfd