Interest rates have been held at 5.25% – a sixteen year high – for the seventh time in a row by the Bank of England’s Monetary Policy Committee (MPC).
The MPC voted by a majority of seven to two to keep the bank rate on hold. It is understood the two members in the minority backed a reduction in rates to 5%.
Mortgage market participants have long said that a fall in the rate of inflation close to the Bank of England target rate of 2% would give the BoE confidence to cut the base rate.
Whilst the recent fall in inflation under normal circumstances might have triggered a rate cut – the MPC (as widely predicted) decided that with a general election in a matter of weeks, a rate change should wait.
Market Financial Solutions chief executive Paresh Raja commented: “Over the past ten months, as the Bank has decided to keep the base rate at 5.25% on seven consecutive occasions, it has been clear that it will delay cuts for as long as it needs to.
“But with inflation now at 2%, and the European Central Bank having made cuts, the pressure is mounting – all signs suggest that, once election turbulence subsides, the Bank will commence rate cuts, although it’s dangerous to take that for granted. All eyes will be on its next meeting on 1st August.”
