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March inflation data means Bank of England "Bank of England will need to hold off on a first rate cut until later this quarter or even Q3"

ended 17. April 2024

The Consumer Prices Index (CPI) rose by 3.2% in the 12 months to March 2024, down from 3.4% in February. On a monthly basis, CPI rose by 0.6% in March 2024, compared with a rise of 0.8% in March 2023. Newspage asked brokers how this could  impact mortgage pricing and the property market, and when that first cut from the Bank of England is now likely. Their views are below.

12 responses from the Newspage community

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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
The never-ending journey to destination 2% hits another bump, with inflation coming in slightly higher than anticipated at 3.2%. This will push that first rate cut further down the road, with its arrival looking more like the autumn than the summer now. Not the news we wanted.
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Craig Fish
Director at Lodestone Mortgages
This is good news, but not as good as expected. With the energy price cap reducing in April, there is hope that this will feed through to the numbers we see in the next print, but with fuel prices rising at the pump again and wage inflation still not reading as the Bank of England want it to, there is diminishing hope of a rate cut in June. SWAP rates and lender rates are ticking up again, so we are not out of the woods yet.
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Michelle Lawson
Director at Lawson Financial
Although marginally higher than forecast, inflation is still moving in the right direction and that should be applauded. It will be interesting to see how the markets react and whether this forces the Bank of England’s hand to go it alone from the US and cut in the summer. Let's see how lenders react to this print.
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Rob Gill
Managing Director at Altura Mortgage Finance
Hot on the heels of US inflation data being slightly higher than expected, UK inflation for March comes in at 3.2% versus expectations of 3.1%. The signs are increasing that the Bank of England will need to hold off on a first rate cut until later this quarter or even Q3. That may also apply to the US Fed.
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Charles Breen
Founder at C B
As inflation falls further, if not quite at consensus, the imperative for the Bank of England is clear: cut interest rates now. Persistent high rates are no longer justifiable in the face of declining inflation and are only pushing more and more homeowners into financial distress. Lowering rates now is not just a monetary adjustment, it's a necessary relief for households. The Bank of England were laggards in cutting rates as much as they should have when inflation began spiking, now let’s not see them make the same mistake again and delay making cuts when they are needed. The question is will they shirk their duty to the ordinary homeowner and stimulate the housing market back to life.
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Graham Cox
Director at Bridging Hub
With analysts predicting inflation to fall to 3.1%, these are slightly disappointing results. A base rate cut in June is now less likely, though that could change next month when a lower energy price cap is expected to result in inflation falling sharply.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Todays figures should be widely welcomed, and mortgage rates should fall soon, following any normal logic. Far from this rational world, the markets are expecting fewer rate cuts this year and for them to start later. The central bank seems set on stifling the economy to ensure the corpse of inflation receives one more bullet. As well as borrowers, it’s great news for everyone’s household finances in addition to business costs so will be widely appreciated.
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Rohit Kohli
Director at The Mortgage Stop
Millions of borrowers will have their hopes raised of an interest rate cut this morning, as inflation fell to 3.2% last month, the lowest level for two years. But the fall was lower than expected so celebrations of a cut may need to be put on hold. Inflation in the US and wage growth in the UK are both running hotter than expected and with the Middle East on the brink of war, this will give the Bank of England plenty of reasons to continue with their overly cautious approach. Expectations of a cut in early summer are dwindling with markets now pricing in a cut later in the year, which is not what anyone wanted.
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Riz Malik
Independent Financial Adviser at R3 Wealth
The final push to the 2% inflation target will likely be the hardest. However, Andrew Bailey has highlighted that the UK and US's inflation issues are different, signalling that a Bank of England rate cut ahead of the Fed may be possible. This is unlikely to move the property market but increases the likelihood of a cut at either the June or August meeting.
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Justin Moy
Managing Director at EHF Mortgages
While the inflation data is extremely encouraging for many reasons, with the slowdown of improvement this 'Higher for Longer' mood is only pushing up Swap rates at the moment, encouraging lenders to edge up fixed deals. We are now in a game of 'Who Blinks First'. Do we wait for the US to make a move or do we get brave and make the first move ourselves?
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Elliott Culley
Director at Switch Mortgage Finance
Although there was a reduction in inflation, it came in slightly higher than predicted, which could lead to a delay in any base rate reductions and higher rates for longer. Not the news we wanted.
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Gary Bush
Financial Adviser at MortgageShop.com
The only way is down for the inflation data thankfully. Let's hope that lenders see this as a sign to lower their fixed rates. Surely as the UK closes in on the Bank of England target it's time for a much needed base rate reduction?