- Economists expect the base interest rate to remain unchanged at 5.25%
- Policymakers paused the two-year rate hike cycle at the last meeting in September
- A Reuters poll of analysts shows that 61 out of 73 expect the Bank’s MPC to keep interest rates stable
Borrowing costs will remain higher for longer as the Bank of England is expected to keep interest rates at a 15-year peak for the second time in a row next week.
Economists expect the base interest rate to remain unchanged at 5.25 percent on Thursday.
Policymakers halted the two-year rate hike cycle at the last meeting in September after 14 consecutive rate hikes that have sent mortgage costs soaring for homeowners.
A Reuters poll of analysts shows that 61 out of 73 expect the Bank’s Monetary Policy Committee (MPC) to keep interest rates steady at its meeting on Thursday.
It comes after the European Central Bank decided to hold rates on hold last week, and ahead of a US Federal Reserve meeting on Wednesday, when bankers are also expected to leave rates unchanged.
Peak: A Reuters poll of analysts shows 61 out of 73 expect the Bank’s monetary policy committee to keep interest rates steady when they meet
At the MPC’s last meeting in September, when interest rates were set, four of the nine members voted in favor of increasing them to 5.5 percent.
“It only takes one committee member to change our minds and tip the balance in favor of more tightening, but we doubt that,” said James Smith, developed markets economist at ING.
He said there has been little new data since the last vote, so those opposed to the rate hike are unlikely to change their minds.
Investec analysts said: ‘The case for a further rate hike appears somewhat weaker for a number of other reasons.’
They cited soft economic data, including lower-than-expected inflation in September, worse gross domestic product than previous forecasts, and weak retail sales and consumer confidence.
“It is not a fully coherent picture, but it is one that is consistent with the economy being in the early stages of a recession,” Investec said.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: ‘The economy is flattening, with growth proving highly elusive, showing that demand is being squeezed out.
“If wage growth and price increases for goods and services continue to decline, policymakers will become more averse to another increase.”
The Bank will also release economic forecasts this week, which will likely include a downgrade to growth prospects amid gloomier economic news.