Rate week

Expect a hold from the Bank of England this week. Yes, inflation is on the rise due to the war in the Middle East but equally policymakers know that the economy is running on fumes and that a hike could further impact already sluggish growth. Technically, given the Bank of England's mandate to keep inflation at or around 2%, it should arguably hike given that inflation rose to 3.3% last week but for now I suspect a hold is the likeliest outcome given the precarious state of the economy and business sentiment.

The Bank of England will do nothing and should leave alone for the time being. This is the wrong kind of inflation, brought on primarily by the conflict, which is beyond the UK population's control. If inflation was brought on by frivolous spending in the High Street, I think we would all acknowledge that rates would need to be increased, but with businesses and consumers struggling with increased utility costs, amongst other bills, the BofE should just leave it alone.

My view is they should cut, but I don't think they will. I'm expecting a hold, and I think the vote will be closer than the Bank would like to admit. The case for cutting is strong. GDP has disappointed, wage growth is easing, and the inflation we're still dealing with is being driven by external forces, global tariffs, energy costs, supply chain pressure, not by an economy running too hot. Holding rates to fight that kind of inflation is a blunt instrument used in the wrong situation. But the MPC will err on the side of caution. What borrowers should watch is the language around the decision. That shapes swap rates, and swap rates shape what you actually pay on a fixed mortgage.

Hoping that they will hold their nerve for a hold. With the chaos in the Middle East, its knock on will push inflation up but resisting the urge to hike will be the order of the day.