London - The Bank of England is widely expected to leave interest rates unchanged at 4.25% when the Monetary Policy Committee (MPC) announces its latest decision at 12:00 BST.
The hold follows a series of four rate cuts over the past year, including the most recent reduction in early May. However, despite signs of economic softness, inflation remains above the Bank’s 2% target, reaching 3.4% in May, its highest level in over a year, due in part to rising food and energy costs.
Analysts suggest further cuts are likely, but not imminent. “We expect the Bank to keep rates on hold this Thursday and implement just one further cut this year,” said Monica George Michail, associate economist at the National Institute of Economic and Social Research. She cited persistent wage growth, government spending, and geopolitical tensions as ongoing risks to price stability.
The UK economy shrank unexpectedly by 0.3% in April, pressured by higher business taxes and weaker exports. Sluggish growth has fueled calls for further easing to stimulate investment and consumer demand.
Still, global uncertainty, including rising oil prices due to Middle East conflict and U.S. tariff changes, adds complexity to the Bank’s rate path.
The base rate significantly affects household borrowing costs. Over 600,000 mortgage holders with tracker loans would see immediate relief from any future rate cuts. Currently, average fixed mortgage rates remain around 5.12% for two-year deals, according to Moneyfacts.
With inflation still elevated, policymakers are expected to maintain a cautious stance before considering another rate move later in the year.
