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Bank of England Holds Steady on Interest Rates in May

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    Base Rate Stays at Highest Level for Nearly Sixteen Years

    The Bank of England voted today to hold the interest rates at 5.25% for the sixth consecutive time.

    In an attempt to reduce inflation, the rate was set at its highest level for nearly 16 years. The Bank is being cautious about cutting the rate in order to reduce inflation to 2% without harming the economy. Currently, inflation is at 3.2%, an improvement but still above the Bank’s target.

    According to the Bank’s accompanying report: “Progress is encouraging, but we are not yet at the point of cutting UK interest rates.”

    This decision was widely expected, but looking at the makeup of the vote as well as the BoE’s economic forecasts can give some idea of how likely future cuts will be.

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      When Will Interest Rates Be Cut?

      The BBC has previously stated that looking at the individual votes of the nine-member Bank of England committee can give clues as to the outlook for cuts later this year. This month’s decision to hold rates was not unanimous, as two members proposed cutting rates immediately. This is one more vote than the last decision, and no members voted for an increase, suggesting some positive change in sentiment among the committee.

      Many forecasters, such as Savills, have predicted the rate will come down later this year.

      According to the BBC, Governor Andrew Bailey said at the Bank’s news conference: “It’s likely that we will need to cut bank rates over the coming quarters and make monetary policy somewhat less restrictive over the forecast period – possibly more so than currently priced into market rates.”

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      What is the Bank of England’s Forecast for the Housing Market?

      According to the Bank of England’s Monetary Policy Report, the country’s economic prospects are improving, with consumer confidence on an upward trend for most of the year.

      They have said that the housing market is beginning to pick up despite prices having been broadly flat for the last year, predicting that this will occur in the months ahead thanks to higher incomes and improved sentiment among households. The RICS has revealed that balances for new buyer enquiries and instructions to sell have moved into positive territory, showing increased activity in the property market.

      Learn more about the state of UK property investment in 2024 with our buy-to-let area guides focusing on topics such as investment property available in Derby and investment property available in Colchester.

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      Jessica Ferris

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      Jessica is a property content writer at RWinvest. Keeping a close eye on the UK property market, Jessica helps our readers stay informed and up to date on the latest market news and statistics.