The Bank of England's Monetary Policy Committee has opted to maintain interest rates, defying expectations of a cut. This decision follows a surge in inflation to 2.6% in November, exceeding the Bank's 2% target. The Bank anticipates that inflation will likely persist at elevated levels in the near term.
Interest rates Its Monetary Policy Committee (MPC) decided not to cut the base rate again, a move widely expected by economists.It comes after an inflation reading yesterday showed it rose to 2.6 per cent in November, up from 2.3 per cent, and higher than the Bank’s two per cent target. Chancellor Rachel Reeves said: “I know families are still struggling with high costs.
We want to put more money in the pockets of working people, but that is only possible if inflation is stable and I fully back the Bank of England to achieve that. “Improving living standards across the country is our number one focus, and is why I chose to protect working people’s pay slips from tax rises, froze fuel duty and increased the national living wage for three million people.”Higher inflation means prices are rising quicker than otherwise, and this can prompt the Bank of England to keep interest rates higher for longer.Previously, it was widely thought the next rate cut would come at the first MPC meeting of 2025 in February., three expected four interest rate cuts in 2025, two thought there would be three whilst one more considered there to be two or three. Capital Economics has said it forecasts that rates will continue to be cut gradually, and that they will fall to 3.5 per cent in early 2026. Pantheon Macroeconomics expects interest rate cuts in February, May and November, taking rates to 4 per cent by the end of 2025.Inflation is expected to increase from its current level of 2.6 per cent, experts have said. Paul Dales, chief UK economist at Capital Economics, predicted that inflation would rise to around 2.8 per cent in January. He said: “We do think that by the end of 2025, CPI inflation will have fallen back close to 2 per cent. But in the first half of the year, we suspect it will be a bit higher than most expect.” Thomas Pugh, economist at RSM UK, said: “The rebound in inflation to
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