The Bank of England has held interest rates steady at 4.5% as it grapples with global and economic uncertainty. The decision, widely expected, is a slight departure from the governor’s previous statements, which hinted at a gradual decline in rates.
Governor Andrew Bailey emphasized that inflation remains above the Bank’s target rate of 2%, currently at 3%. To combat this, the Bank has implemented three rate cuts since August last year. However, economists predict two more rate cuts by the end of the year, with May being a potential candidate for the next cut.
The base interest rate affects mortgage and credit card rates, but savers have benefited from higher returns in recent years. Around 600,000 homeowners face the impact of this decision, as their mortgages track the Bank’s rate.
For many, including 46-year-old Louise Gibson, whose fixed-rate mortgage ends in October, the uncertainty is causing anxiety. Ms. Gibson, a volunteering manager, fears the next five years will be challenging and may struggle to pay her higher repayments.
The Bank has warned of potential price increases for UK businesses exporting across the Atlantic due to US trade tariffs. The measures have also impacted the UK’s economic growth forecast, with the Bank now predicting inflation to rise further this year.
Governor Bailey stressed that the Bank aims to keep inflation stable and will continue to monitor global and domestic developments closely. With the Chancellor urging greater action to ease cost of living pressures, politicians are calling for more decisive measures to boost economic growth.
Source: https://www.bbc.com/news/articles/ckgz82838l8o