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UK interest rates held at 5.25%, as expected

With inflation forecasts falling, two 0.25% cuts remain likely this year.

09 May 2024

Forecasting central bank action is getting predictably boring these days. No change in rates was expected from the Bank of England (BoE) and no change was duly delivered. At the previous meeting one member voted for a cut (Swati Dhingra) and eight voted to hold, whereas at this meeting another member shifted to cutting territory (Dave Ramsden) while seven stood firm. This came as a bit of a surprise as the expectation was for all nine members to vote to hold.

Further out markets are still pricing in two 25 basis point cuts for this year, and with inflation forecasts at the BoE being revised lower, there is more than enough justification to reduce rates soon. Sadly, it will be too little and possibly too late for the incumbent Tory party hoping for a feel-good factor boost in the polls that lower rates could bring. We will have lower rates and a different government this year – that much is as certain as one could make.

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Charles Hepworth

Investment Director
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