Bank of England’s MPC Likely Keeps Rates Steady at 4.25%
All eyes are on Thursday’s meeting, and most economists are predicting the Bank of England will keep the Bank Rate locked at 4.25 %. Why? The world’s price tags are on the rise, and a handful of global tensions are feeding the beast.
Food Prices Are Making Your Grocery List Feel Like a Luxury Budget
- Data from the Office for National Statistics (ONS): Food and non‑alcoholic drinks jumped a hefty 4.4 % year‑on‑year to May.
- Consumer Prices Index (CPI) rose to 3.4 % in May, nudging ahead of the 3.3 % forecast.
- Monica George‑Michail (NIESR) warns inflation will stay above 3 % for the rest of the year.
Wage Growth + Government Spending = More Money in the Pocket… but Not for Prices
Persistent wage growth and booming government spending keep the inflation engine revving. Meanwhile, tensions in the Middle East add extra fuel to the mix.
Economists’ Take on the Future of Rates
• Monica George‑Michail (NIESR): The MPC will hold rates this week and maybe cut once more later in the year.
• Sandra Horsfield (Investec): National Insurance hasn’t hit the economy yet, and US tariff uncertainties loom. Energy price jitters from the Middle East make a rate cut on Thursday unlikely. A cut looks more likely at the August meeting.
Bottom Line for the Average Brit
Everything from your selvedge sofa to your weekly coffee is costing a bit more. If the MPC sticks with 4.25 %, expect slightly higher borrowing costs, but no immediate hikes. Keep an eye out for that August talk – that’s where we might see a rate cut.
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