Borrowers look set to take another hit on Thursday. UK base rates currently stand at 3.5 per cent. The City is betting that the Bank of England’s rate-setting Monetary Policy Committee MPC) will impose a 0.5 percentage point rise to 4 per cent.
Is there any chance of the MPC springing a surprise? While it is only six weeks since the Bank’s last meeting, the economic backdrop has shifted somewhat. On the plus side, the elephant in the room inflation, which it is the MPC’s job to control
has started to fall with most people calling the peak at October’s horrid-looking 11.1 per cent. The December figure came in at 10.5 per cent.
Another factor that may raise borrowers’ hopes is the way energy prices have moved. These are volatile, which must be borne in mind. But gas prices have fallen substantially, which is also very good news for chancellor Jeremy Hunt. While they have yet to substantially influence the Consumer Prices Index, it’s coming.
UK economic indicators, meanwhile, have been moving in the wrong direction, another reason for the MPC to consider a lighter touch. This has been weighing on the minds of the committee’s twin doves: Silvana Tenreyro and the recently appointed Swati Dhingra.
This story is from the January 30, 2023 edition of The Independent.
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This story is from the January 30, 2023 edition of The Independent.
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