Bank of England interest rates decision due this week - but will it be another cut?
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The Bank of England will this week announce whether interest rates will be cut again. The base rate is currently at 4.75% after it was cut from its previous high of 5.25%. The base rate influences how much you're charged to borrow money - for example, if you're taking out a mortgage - and how much interest you make from your savings.
The Bank of England meets every six weeks to decide whether to change the base rate, with its next meeting set for this Thursday - and the majority of economists and financial analysts are expecting another hold. This will be disappointing news for millions of mortgage holders, who will be hoping for another base rate cut in the not too distant future.
But ahead of their announcement, we'll be told this Wednesday whether UK inflation has crept higher above the Bank of England 2% target once again. The Consumer Price Index (CPI) measure of inflation rose to 2.3% in the 12 months to October 2024, its first increase in three months, and up from the 1.7% that was recorded in September.
It's expected to be confirmed this week that inflation has gone up again, and the Bank of England has previously said it predicts inflation will rise this year. Its members will also be taking wage growth into account when they meet this week. If pay rises too sharply, then it sparks worries that businesses may put up prices to offset higher wages for staff.
The latest UK wage growth data shows average weekly earnings, excluding bonuses, accelerated from 4.8% year-on-year in September to 5.2% year-on-year in October. Chris Arcari, Head of Capital Markets at Hymans Robertson, said: “Today’s release from the ONS regarding UK wage-growth data – showing average weekly earnings, excluding bonuses, accelerated from 4.8% year-on-year in September to 5.2% year-on-year in October – all but confirms that the Bank of England will leave rates unchanged.
