POLL: Should Bank of England have held interest rates? | Personal Finance | Finance

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Today the Bank of England announced its decision to hold interest rates at 5.25 percent for the ninth month in a row.

The announcement was made at noon. There are nine members of the Monetary Policy Committee (MPC) which sets the base rate.

Last month one member voted for a cut in the base rate, but this month this increased to two.

City experts said the MPC appears to be edging towards cutting rates, which would be a relief to mortgage holders who have suffered devastating monthly repayments since August 2023.

The Bank of England said: “Seven members (Andrew Bailey, Sarah Breeden, Ben Broadbent, Megan Greene, Jonathan Haskel, Catherine L Mann and Huw Pill) voted in favour of the proposition.

“Two members (Swati Dhingra and Dave Ramsden) voted against the proposition, preferring to reduce Bank Rate by 0.25 percentage points, to 5 percent.”

The MPC said: “Following modest weakness last year, UK GDP is expected to have risen by 0.4 percent in 2024 Q1 and to grow by 0.2 percent in Q2.

“Despite picking up during the forecast period, demand growth is expected to remain weaker than potential supply growth throughout most of that period.

“A margin of economic slack is projected to emerge during 2024 and 2025 and to remain thereafter, in part reflecting the continued restrictive stance of monetary policy.”

The move has proved controversial with financial experts with many coming out in support of the decision but some disagreeing with the Bank of England’s strategy.

Nicholas Hyett, Investment Manager at Wealth Club, said: “The Bank of England continues to diagnose persistent inflation as the major danger facing the UK economy. However, it’s an increasingly delicate balancing act, and there’s a real risk the economic cure might end up being worse than the disease.

“To be fair the picture is murky. The market expects Friday’s GDP data to show the UK returned to growth in the first quarter, ending last year’s short-lived recession.

“But a 12 percent cut in the energy price cap will probably drag inflation back below the bank’s 2 percent target this month – at least temporarily. The former suggests interest rates are just fine where they are, the second that rates could do with a trim.

“The result is a natural inclination to sit on the fence a little longer, especially since cutting too early risks sinking sterling and kick starting another bout of inflation. Leave interest rate cuts too late though, and the Bank risks accidently cratering the economy in its eagerness to get inflation under control. The MPC’s two dissenters clearly think that risk is growing.”

Commenting on the MPC’s decision not to change the Bank Rate from 5.25%, Paul Broadhead, Head of Mortgage and Housing Policy at the BSA said: “With inflationary pressures continuing, it is no surprise that the Bank Rate has been held at 5.25 percent.

“We still anticipate that the MPC will cut rates later this year, and although mortgage rates have ticked up slightly in recent weeks, they remain lower than they were this time last year.”

But we want to know what Express readers think of the decision to keep the base interest rate – and you can vote in our poll below to let us know how you feel.


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