The Monetary Policy Committee (MPC) will meet today to determine whether the Bank of England Base Rate will rise, fall, or remain the same.
The Base Rate has remained unchanged at a 16-year high of 5.25 percent since August 2023, pushing more pressure on mortgage holders facing higher interest rates and rising monthly repayments.
While inflation – a factor the MPC largely takes into account when deciding the Base Rate – may have fallen again in the 12 months to February to 3.4 percent, it remains far off the Government-set target of two percent.
Subsequently, the MPC is widely anticipated to keep the Base Rate frozen today while it awaits stronger signs that inflation is falling to its target level.
However, market analysts argue that with consistent falls in the growth rate of inflation, the MPC is “running out of reasons not to cut rates”.
Julian Jessop, economics fellow at the free market think tank, the Institute of Economic Affairs, said: “The latest drop in inflation demonstrates the urgent need for the Bank of England to begin cutting rates.
“The renewed slowdown in the headline rate – to 3.4 percent in February – paves the way for annual inflation to fall below the two percent target in April when the new Ofgem cap on energy bills kicks in.”
Mr Jessop added: “By far the bigger risk is that having been too slow to act when inflation was taking off, the Bank of England will now be even slower to respond on the way down.”
When the MPC last held their meeting on February 1, six members of the committee voted to hold the base rate at 5.25 percent, one voted to reduce it, and two voted for a hike.
The MPC will announce its decision at midday today.
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