Interest Rates
Are rates likely to go up at the next MPC meeting and if so, by how much?
Copy article
7 responses from the Newspage communityCopy all
Copy all
Copy
There's another 0.25% rise to come from the Bank of England, but it might not be their next meeting. Depending on the next inflation figures, the MPC could opt to keep rates on hold at their next meeting and delay the final rate rise. This is unlikely. Even if inflation falls, most MPC members believe they need to keep the faith with raising rates, however damaging that is to the economy. The good news is that we are near the peak, and when inflation starts to fall rates will follow.
Copy
With the current balance of hawks and doves on the monetary policy committee, an additional 0.25% rate hike is possible during the forthcoming meeting. Nonetheless, if inflation begins to fall in the summer months, we may see the long-awaited turnaround that we all expect and hope for.
Copy
I see no reason why the BOE should continue to tighten the screw and punish UK homeowners further than they already are. I think we have now peaked at 4.25%. Towering inflation rates are not consumer-driven, but driven by the greed of the power companies and fuel companies. The government needs to take a stand. Cap the price of fuel and watch inflation tumble, but instead, they find a population in fear and distress is harder to control than a comfortable population.
Copy
With positive reports from here, Europe and the USA, the Bank of England may well keep rates on hold pending seeing a clearer and positive trend on inflation. US inflation has turned a corner and with GDP static it would serve little purpose for the Bank of England to hike rates further at this stage of the economic cycle. The base rate should decrease to circa 3% over the course of the next 12/18 months.
Copy
Most will expect there may be one further rate increase of 0.25% at their next meeting with the overall base rate peaking at 4.5% until inflation is truly under control. The Bank of England can't be seen as taking its foot off the gas with its methods of managing inflation until we start seeing some significant reductions around this. With less concern about a banking crisis and GDP not turning negative in the latest data, it strengthens the idea there is still room for a further increase if it is needed.
Copy
I struggle to foresee rates increasing much further, as inflation appears to have turned a corner and the markets have started to settle. With investors around the globe cautiously following the banking collapses in America, there is certainly a need for stability. Confidence in the U.K. economy is returning following a more challenging 6 months, and our housing market is under more normal conditions, with activity similar to pre-covid times. Business owners are becoming more confident to re-invest into their companies, therefore further increases in rates would only create a net negative effect.
Copy
It would be a surprise if another rise in rates was forthcoming as a period of settlement is def required now and signs are things are improving.