Bank of England expected to keep interest rates intact

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By journalsofus.com


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The Bank of England is expected to keep interest rates at 5.25% for the fifth consecutive time on Thursday.

Despite the lower-than-expected February inflation data, it is also expected to remain cautious in signaling when future rate cuts will occur.

The bank is attempting to reduce inflation without harming the economy.

Inflation, the rate at which prices rise over time, has been falling slowly since reaching 11.1% in October 2022, its highest rate in 40 years.

However, prices are not falling yet, they are rising less rapidly than before.

Bank Governor Andrew Bailey has said that the bank will wait for strong evidence that inflation is under control before cutting rates.

Its inflation target is 2% and to achieve this it either raises, maintains or lowers rates.

It is keeping rates steady after 14 consecutive hikes, which were aimed at curbing the accelerating pace of general price increases.

By keeping interest rates high, the bank is trying to control the pace of price growth without hurting the economy – which has been sluggish in recent years.

This policy of high interest rates has increased the cost of borrowing for households and the government.

Savers, on the other hand, may be able to get higher interest rates on their accounts.

The Bank looks at many factors in the economy when deciding how rates should be set.

Service inflation and wage growth are two major factors that the bank takes into consideration while deciding to cut rates.

Wage growth slowed to 6.1% in February, down from about 8% in the middle of last year.

But inflation in services – which covers hotel stays and insurance premiums – remained high at 6.1%.

The bank also takes into account factors such as job losses and economic output.

Like the UK, interest rates were rising around the world, but in recent months, other central banks including the US Federal Reserve and the European Central Bank have also halted their rate hikes.

The UK has had the highest interest rates among the G7 – the group representing the world’s seven largest so-called “advanced” economies.

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