Brits may have to wait until August for Bank of England to cut interest rates again

SQUEEZED Brits may have to wait until August for the Bank of England to cut interest rates again, according to economists.

As widely expected the Bank yesterday voted to hold interest rates at 4.5 per cent as it flagged Donald Trump’s tariffs had made the global economy much more volatile.

Andrew Bailey, Governor of the Bank of England, speaking at a press conference. — Andrew Bailey, Bank of England governor, said that there was ‘a lot of economic uncertainty at the moment’Credit: Reuters

Andrew Bailey, governor, said that there was “a lot of economic uncertainty at the moment”.

The Bank has lowered interest rates three times from its 16 year high of 5.25 per cent but is now having to walk a tightrope between not squeezing the economy too hard with high borrowing costs and allowing inflation to rise sharply again.

The Bank said that it was not on a “pre-set path” to lowering rates, which traders took as a sign that it would skip a cut in May too.

Interest rates are meant to suppress spending and encourage saving, which in theory means that it is harder for prices to rise as rapidly as consumers can’t afford to buy.

The Bank reckons inflation will rise further this year to 3.7 per cent and stay above its 2 per cent target until 2027.

It also flagged that more companies are freezing their hiring plans and expect inflation this year.

Economists at S&P Global now predict the Bank of England’s next rate cut will be in August and then followed by one more small cut in November which will reduce the base rate to 4 per cent byu the end of the year.

Raj Badiani at S&P Global Market Intelligence said the Bank “is likely to tread carefully about the timing of the next rate cuts, given the uncertainty of the main Autumn Budget 2024 measures on short-term inflation developments.”

No one believes Labour are really putting money in people’s pockets so they need to stop lying about it