Encouraging News Sparks Predictions of Interest Rate Cuts
The Bank of England has announced that inflation is expected to reach its target of two per cent 18 months ahead of schedule. This projection has led to predictions of interest rate cuts, with four or five expected in the coming months, starting as early as the summer.
The Bank's latest report reveals that inflation has fallen significantly from its 40-year high in October 2022 and currently stands at four per cent. It estimates that the figure will decrease to two per cent between April and June of this year.
Despite discussions around potential rate cuts, the Bank of England has decided to maintain interest rates at 5.25 per cent for the fourth consecutive time. However, for the first time since the pandemic, one member of the committee voted in favor of an immediate rate cut. On the other hand, two members voted for an increase to 5.5 per cent, while the remaining six members favored keeping rates unchanged. This three-way split on rates hasn't occurred since 2008.
Bank governor Andrew Bailey emphasized the need for further evidence that inflation will consistently reach the two per cent target before considering any interest rate reductions. He stated, "We need to see more evidence that inflation is set to fall all the way to the two per cent target, and stay there, before we can lower interest rates."
Chancellor Jeremy Hunt, however, urged caution and advised against overly optimistic predictions. He highlighted the fact that inflation doesn't typically decrease in a linear fashion, stating, "We should remember that inflation never falls in a straight line."
Did you miss our previous article…
https://hellofaread.com/money/water-bills-set-to-rise-in-uk-find-out-how-much-more-youll-be-paying/
