Despite the Bank hinting rate cuts are to come, there are several key reasons why it won't do so yet
The Bank of England’s Monetary Policy Committee is opting to keep interest rates at their current level of 5.25 per cent The decision, which was made on a 7-2 majority, comes despite the Bank forecasting again that inflation will come down to its target level of 2 per cent later this spring.
In its Monetary Policy Report on Thursday, the Bank of England said part of the growth in inflation in the second half of the year would be down to “the unwinding of energy-related base effects.” Higher wages mean people can have the capacity to pay higher prices, which can push inflation upwards. This means later in summer, the Bank could have a better idea as to whether pay is declining as hoped. This would likely make any decision to cut rates easier.“There continues to be upside risks to the near-term inflation outlook from geopolitical factors,” the Bank said on Thursday.
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