Interest rate hike in balance as inflation slows
The Bank of England may break the succession of rate rises (pic: Terry Murden)
Interest rates will be left unchanged next month, according to new analysis which predicts that the Bank of England will bring an end to eleven successive monthly rises.
A survey by Bloomberg indicates that more than half of City economists expect the bank’s monetary policy committee (MPC) to end its aggressive rate hike cycle.
However, a twelfth straight rate increase next month, is still being factored in by markets. The EY ITEM Club said yesterday that the MPC will opt for an increase at the next meeting on 11 May.
The bank has raised interest rates to 4.25% to bring down inflation which peaked at 11.1% before Christmas. It is expected to dip back to single digits in Wednesday’s data and fall steadily towards the bank’s 2% target by the end of the year.
While interest rate hikes are seen as the key weapon in tackling inflation, there has also been a significant fall in international energy prices since the record highs that followed Russia’s invasion of Ukraine.
Wage increases are also expected to be more modest as businesses rein in hiring intentions in response to the global slowdown.