1 February: Cuts Expected From Summer Onwards
The Bank of England has, as expected, held its Bank Rate at 5.25% for the fourth time in a row, leaving it unchanged since August last year, writes Andrew Michael.
The Bank’s Monetary Policy Committee voted by six votes to three to maintain the Bank Rate at a 16-year high. Of the three unsuccessful votes cast, two were in favour of hiking the Bank Rate to 5.5%, while one favoured reducing borrowing costs to 5%.
Today’s announcement aligns with recent decisions by other central banks such as the US Federal Reserve and the European Central Bank (see stories below).
The announcement means that millions of borrowers on variable rate and tracker mortgages and loans should see no direct impact on their repayments, although lenders are free to increase variable rates if they choose.
New borrowers and those coming to the end of fixed deals and needing to remortgage this year – over one million borrowers – will be watching closely to see how lenders react to today’s announcement.
Today’s news also means that savers are able to receive a ‘real’ return on cash held in bank and building society accounts, provided they track down the best deals. A real return is obtained when the interest being paid out from a savings account or bond is greater than the prevailing inflation figure, which at the moment is 4%.
The top-paying fixed interest bonds are paying over 5%, according to our savings…
