The Bank of England is set to announce its decision on interest rates on Thursday, with Governor Andrew Bailey aiming to bring inflation down to a 2 per cent target. Inflation has dropped to 3.4 per cent in February, the lowest level since September 2021, prompting speculation about a potential interest rate cut.
Despite the positive news on inflation, the Bank of England is expected to keep interest rates at 5.25 per cent for now. Analysts predict that the Bank will wait until June to make its first interest rate reduction.
The drop in inflation could have positive implications for mortgage holders, as borrowing costs may decrease if interest rates are cut later this year. However, the housing market continues to face challenges, with rents rising at the fastest rate on record.
Overall, the economic outlook is improving, with the possibility of pre-election tax cuts and interest rate reductions on the horizon. The Bank of England’s decision on interest rates will be closely watched as the UK economy continues to recover from the impact of the pandemic.