Interest rates LIVE: Bank of England poised to hold interest rate at noon (Image: Getty)
The Monetary Policy Committee (MPC) will meet today to determine whether the Base Rate will rise, fall, or remain the same.
In November, the MPC cut the Base Rate to 4.75% from 5%, marking the second reduction of the year. However, with on the rise again, expectations are that the Bank of England will hold off on further cuts this week.
Official figures released on Wednesday showed that inflation in the UK rose to its highest level in eight months in November. Consumer prices increased by 2.6% year-on-year, up from 2.3% the previous month. The rise was driven by high inflation in services, which makes up about 80% of the economy, and a jump in fuel prices.
This increase pushes inflation further from the Bank of England’s 2% target, reinforcing market expectations that the Bank will keep the Base Rate steady at 4.75% after today’s meeting.
Julian Jessop, an economics fellow at the Institute of Economic Affairs, described the latest inflation figures as disappointing but not surprising. He explained that most forecasters, including the Bank of England, had expected a temporary increase before next year’s main Budget measures.
He said: “Nonetheless, the news surely kills off any chance of a rate cut this week. And combined with stalling economic growth and the early signs of a slump in the labour market, talk of ‘stagflation’ could dampen confidence further.”
However, he reassured that most households should see real income growth, and public spending would offset some private sector weakness.
Mr Jessop suggested a mild period of “stagflation-lite” before inflation falls and the economy picks up in 2025. He added: “The new government’s promise to ‘kick start’ economic growth looks even more hollow, and the chances of a much worse outcome are increasing.”
However, he stressed that the Bank of England must reassure the public that it can still cut gradually next year despite inflation heading in the wrong direction.
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When will we know the Bank’s decision?
The Governor of the Bank of England usually makes their recommendation to hold, raise or cut base rate the day before the announcement.
Andrew Bailey’s recommendation is then voted on by members of the Bank’s rate-setting Monetary Policy Committee (MPC).
Unsurprisingly, the majority vote holds sway, and in the case of a tie, the Governor has the casting vote.
Minutes of this month’s meeting and the final decision will be published at noon.
The Bank’s Monetary Policy Committee members vote on the Governor’s recommendation (Image: Getty)
Welcome to our live blog
Good morning and welcome to our live blog where we’ll be bringing you details of today’s base rate decision.