Andrew Bailey previously stated the UK has passed the peak of inflation (Yui Mok\/PA) (PA Wire) <\/p>\n
Interest rates<\/a> are widely expected to remain at 3.75% as Bank of England<\/a> policymakers prioritise curbing above-target inflation<\/a> while also monitoring economic growth, according to expert analysis.<\/p>\n The Bank\u2019s Monetary Policy Committee (MPC) is anticipated to leave borrowing costs unchanged when it announces its latest decision on Thursday, marking its first interest rate<\/a> setting meeting of the year.<\/p>\n This follows a rate cut delivered before Christmas, which was the fourth such reduction.<\/p>\n At the time, Governor Andrew Bailey<\/a> noted that the UK had “passed the recent peak in inflation<\/a> and it has continued to fall”, enabling the MPC to ease borrowing costs. However, he cautioned that any further cuts would be a “closer call”.<\/p>\n Since that decision, official data has revealed that inflation unexpectedly rebounded in December, rising for the first time in five months.<\/p>\n The Consumer Prices Index (CPI) inflation rate reached 3.4% for the month, an increase from 3.2% in November, with factors such as tobacco duties and airfares contributing to the upward pressure on prices.<\/p>\n Economists suggest this inflation uptick is likely to reinforce the MPC\u2019s inclination to keep rates steady this month.<\/p>\n Philip Shaw, an analyst for Investec<\/a>, stated: “The principal reason to hold off from easing again is that at 3.4% in December, inflation remains well above the 2% target.”<\/p>\n He added: “But with the stance of policy less restrictive than previously, there are greater risks that further easing is unwarranted.”<\/p>\n Shaw also highlighted other data points the MPC would consider, including gross domestic product (GDP<\/a>), which saw a return to growth of 0.3% in November \u2013 a potentially encouraging sign for policymakers.<\/p>\n Matt Swannell, chief economic advisor to the EY ITEM Club<\/a>, affirmed: “Keeping bank rate unchanged at 3.75% at next week\u2019s meeting looks a near-certainty.”<\/p>\n He noted that while some MPC members who favoured a cut in December still have concerns about persistent wage growth and inflation, recent data has not been compelling enough to prompt back-to-back reductions.<\/p>\n How the UK interest rate has changed in recent years <\/p>\n
The rate of inflation in recent years <\/p>\n