How inflation rebound is set to affect UK interest rates
Why Bank of England is set to keep interest rates unchanged in first 2026 announcement
- The Bank of England's Monetary Policy Committee (MPC) is widely expected to keep interest rates at 3.75% when it announces its decision on Thursday.
- This anticipated decision follows an unexpected rise in the Consumer Prices Index (CPI) inflation rate to 3.4% in December, up from 3.2% in November.
- Economists suggest that the inflation uptick, which remains well above the 2% target, will reinforce the MPC's inclination to maintain current borrowing costs.
- The Bank had previously cut rates before Christmas, with Governor Andrew Bailey noting inflation had passed its peak, though he cautioned future cuts would be “a closer call”.
- Analysts forecast the next potential rate cut to occur in April, with forthcoming data on pay settlements expected to be a decisive factor in shaping policy.
Bookmark popover
Removed from bookmarks