12:13 PM, 21st September 2023, About 2 months ago 2
The Bank of England (BoE) has hit the brakes on base rate rises with news that the current rate of 5.25% will remain unchanged.
The decision brings to an end 14 months of base rate rises and follows an unexpected slowdown in price rises last month when inflation fell to 6.7%.
And the BoE follows the US Fed’s decision yesterday to maintain its base rate.
Financial experts say that interest rate rises may have peaked.
However, the Bank’s Monetary Policy Committee was split on the decision with a vote to maintain rates agreed by a narrow margin of 5-4.
Four members voted to raise rates to 5.5%.
The Bank of England Governor, Andrew Bailey, said: “Inflation has fallen a lot in recent months, and we think it will continue to do so.
“But there is no room for complacency.
“We need to be sure inflation returns to normal and we continue to take the decisions necessary to do just that.”
Mark Harris, the chief executive of mortgage broker SPF Private Clients, said: “Following better-than-expected inflation figures, the Bank of England has made the wise move to halt the consecutive rate hikes and give them time to do their job.
“Consecutive rate rises have been painful; it’s time to leave alone for now, rather than causing continued anxiety and distress for borrowers.”
Matt Thompson, the head of sales at Chestertons, said: “Today’s announcement brings to an end a sequence of 14 consecutive rate hikes since March 2020.
“Speculation had intensified in the last week that the Bank would leave interest rates unchanged following the recent announcement that interest rates were nearing its peak.
“This though does not mean that the Bank has finished its current cycle of interest rate hikes, with the consensus expectation being for one more increase as the Bank continues to address high inflation.”
Jonathan Samuels, the chief executive of Octane Capital, said: “The latest figures released this week suggest that inflation is now starting to ease.
“This is why the base rate has been left unchanged and will no doubt be heralded as proof of success by the Bank of England with respect to their approach to managing the economy.”
He added: “However, it’s fair to say that had they acted with greater speed and intent, the rate of inflation wouldn’t have maintained such a stubborn trajectory in the first place.”
Marc von Grundherr, a director of Benham and Reeves, said: “Today’s freeze will be a small victory for the nation’s homebuyers who have seen the financial goal posts move constantly in recent months.
“But despite rates remaining unchanged there will still be a real worry for those coming to the end of a fixed rate term, having previously locked in at a relatively affordable rate when they first purchased.”
He added: “When their mortgage term does expire, they are likely to find that the cost of their monthly repayments has risen considerably and this is really the last thing anyone wants to contend with, not only with the current cost of living, but with Christmas just around the corner.”
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