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Political decision -makers of the Bank of England will study the latest economic data
The Bank of England should keep interest rates pending when decision -makers announce their last decision on Thursday.
The banking rate strongly influences the cost of borrowing for households, businesses and the government, as well as yields for savers.
It was reduced by 4.75% to 4.5% after the last meeting of the Bank’s Monetary Policy Committee (MPC) in February.
Although no change is expected when the announcement comes at 12: 00 GMT, many analysts provide two additional reductions by the end of the year.
Generalized impact
The MPC has a member of five women and four men, including economists and personalities from the Bank of England. It is chaired by the governor of the bank, Andrew Bailey. How these members vote will be closely monitored by the markets.
The committee meets eight times a year, and its decisions have a general impact on everything, from the cost of mortgages to the capacity of companies to invest.
Its main objective is to use interest rates to ensure inflation – the annual price increase rate – achieves the government’s target by 2%.
The latest calculations have shown that the inflation rate has increased to 3% in January, one of the reasons why commentators expect interest rates this time.
Decrease rates could stimulate more expenses by consumers and push higher inflation.
This could be a blow for some owners who would like to see interest rates and, in turn, mortgage rates continue to drop.
“The political decision-makers of the Bank of England warned against inflation and persistent uncertainty, therefore an additional relief of rate reduction for the owners seems to be an unlikely result of the meeting of this month,” said Paul Heywood, head of data and analyzes of the Credit Agency Equifax UK.
Mortgage interest rates have slowly decreased, mainly because markets and loan suppliers expect more benches over the year.
The MPC has carried out three interest drops since August 2024, bringing it back to its lowest level for 18 months. However, the bank also said that it would take a “gradual and prudent” approach for additional discounts.
Lower rates could also mean lower borrowing costs for loans and credit cards, but also reduced saving yields.
Wider economic image
These decisions will be motivated by the prospects of the British economy.
After the MPC meeting in February, the bank reduced its economic growth forecasts for this year, although it has improved its forecasts for 2026 and 2027.
He said the British economy is expected to increase by 0.75% in 2025, decreasing compared to its previous estimate of 1.5%.
Meanwhile, he said he expected the inflation rate to reach 3.7% and took until the end of 2027 to fall back to his target by 2%.
In addition to these predictions, he is uncertain about national and global economic policy.
Next week will see Chancellor Rachel Reeves deliver her spring declaration, which is unlikely to include major political ads but will include the point of view of the official forecastist – the Budget Liability Office – on the British Economy Directorate. It will also include certain details of spending allowances for government services.
The British economy is widely considered to be underperformant and global factors, such as American commercial prices, have an indirect impact on the United Kingdom.
