The Bank of England is expected to hold the base interest rate at 3.75% when it announces its latest decision on Thursday.
There was a cut of 0.25% in December to its lowest level in nearly three years, but it was a close decision of the Bank’s Monetary Policy Committee with Governor Andrew Bailey’s (main picture) vote crucial, and economic factors are against a back-to-back reduction.
Inflation rises
Government figures released last month revealed inflation rose for the first time in five months, climbing to 3.4% from 3.2% in November, which is well above the Bank’s 2% target.
A poll of economists carried out by Reuters showed that almost every economist expects the Bank to retain the current rate this week.
Hopes fade
And Knight Frank is also saying hopes of a cut have faded.
Tom Bill, Head of UK Residential Research at the agency, says: “An underlying assumption of two Bank rate cuts this year has become less certain in recent weeks.”
There is also uncertainty about future rate cuts as well, with another decision due on March 19.
Political upheaval
Any political upheaval after the by-election later this month and local elections in May could also have an impact, Knight Frank warns.
An attempt to unseat Prime Minister Keir Starmer could make the markets and the Bank jittery about the economy.
“A Labour loss in this month’s by-election would be bad news for the Prime Minister, but also anyone with a mortgage,” Bill says.
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