The Bank of England has voted to hold the base rate at 4% following a Monetary Policy Committee (MPC) meeting today – despite saying inflation has “peaked” at 3.8%.
The MPC voted 5-4 in favour of holding the rate, with the remaining members voting for a 0.25 percentage point cut to 3.75%.
While the rate has been held, some experts have said lenders are already eyeing up a cut around Christmas and may be factoring that into their decisions now, which could translate as mortgage rate reductions.
Laith Khalaf, head of investment analysis at AJ Bell, said: “Black Friday deals might be all around us but the Bank of England isn’t joining in the frenzy by cutting the price of money.
“This puts a Christmas rate cut firmly on the cards. The Bank next meets on 18 December and moving rates down to 3.75% seems already wrapped up, especially given that four members of the committee want to see base rate at that level right now.”
He added: “The good news is the Bank thinks inflation has peaked, the bad news is it doesn’t forecast CPI being back to its 2% target until 2027. That suggests only very gradual reductions in interest rates, and only to around 3.5%.
“Some members of the Bank are mindful of the downside risks posed to the economy of keeping monetary policy too tight for too long, but others highlight the risk of persistent inflation and want to see more evidence that disinflation is taking place.”
