The Bank of England’s Monetary Policy Committee, (MPC) have continued to ignore growing calls for a Base Rate cut and voted by 7-2 to maintain the Bank Base rate at 5.25%, despite yesterday’s fall in inflation.
The Consumer Prices Index, (CPI) rose by 2% in the twelve months to May 2024, down from 2.3% in April, and after many long months, there is finally something to cheer about as inflation has hit its long-term target of 2%, which will be a shot in the arm for the economy.
Whilst we should see a resulting fall in SWAP rates which should give lenders room to release some “Summer Sizzler” products with lower rates, one swallow does not make a summer.
The Bank of England has once again erred on the side of caution, with wage and services inflation staying stuck at levels the Bank are still uncomfortable with. Equally, cutting rates just before a General Election may be considered too political and lead to questions over their independent status.
Whilst there is also a concern that current inflationary falls may be temporary and could bounce in the last quarter of the year, the country desperately needs the boost of a cut to relieve some of the financial pressures that have held back the economy and put borrowers under immense pressure.
The Bank of England is fast running out of excuses.
For mortgage borrowers, this decision will cause an audible sigh of despair as they feel they have taken more than their fair share of a battering in the battle against inflation.
We need brave action from the Bank and a cut in August must now surely be on the cards or some serious questions must be levelled at the Governor.
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