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The Bank of England is widely expected to keep interest rates on hold on Thursday after the latest UK inflation figures remained stubbornly high.
Most economists think the Monetary Policy Committee (MPC) rate-setters will keep base rate unchanged at 5 per cent, its highest level since 2008, during the global financial crisis.
The Bank cut rates from 5.25 per cent last month – the first reduction since 2020, in a move welcomed by squeezed borrowers still suffering from the cost-of-living crisis. The move disappointed savers, however.
Bank of England governor Andrew Bailey said it had been able to cut the base rate because inflationary pressures had “eased enough”.
August’s inflation was unchanged at 2.2 per cent, which was higher than the Bank of England’s 2 per cent target but was below the 2.4 per cent the Bank itself had predicted at this stage.
Keeping the base rate on hold means mortgage repayments are unlikely to change.
Savers £4bn better off thanks to higher easy-access rates
Savers are an estimated £4billion better off following improvements to easy-access rates in recent months, according to the City regulator.
The Financial Conduct Authority (FCA) said the average interest paid on easy-access savings accounts increased to 2.11% in June, up from 1.66% in July 2023, just before it published a review.
It said: “We estimate savers are £4 billion a year better off from higher interest rates as a result.”
A new consumer duty was introduced by the regulator last year, requiring financial firms to put consumers at the heart of what they do, including when designing products and communicating with customers.
In July 2023, the FCA also set out a 14-point action plan to ensure banks and building societies were passing on interest rate rises to savers appropriately, that they were communicating with customers more effectively and that they were offering them better savings rate deals.
The FCA said that while interest rates on savings accounts had been rising, this had been happening more slowly for easy-access accounts.
Jane Dalton19 September 2024 04:15
How inflation has accelerated or eased for everyday items
Examples of how everyday costs changed:
Jane Dalton19 September 2024 03:00
MPC set to put interest rate cuts on hold
The Bank of England is expected hit the pause button on interest rate cuts after warning it needs to be “careful” not to rush the decision as pressures on inflation linger:
Jane Dalton19 September 2024 01:30
How UK interest rates have changed since 2007:
Jane Dalton18 September 2024 23:55
Glimmer of hope for borrowers
The crumb of comfort for hard-pressed borrowers is that there will by ample scope for a cut in November if inflation remains below the Bank’s predicted path, writes James Moore:
Jane Dalton18 September 2024 22:50
Welcome to our live coverage of the Bank of England’s interest-rate decision due to be announced on Thursday.
Jane Dalton18 September 2024 21:43