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Interest rates LIVE: Bank of England to make knife-edge decision as bets slashed on hike

NewsInterest rates LIVE: Bank of England to make knife-edge decision as bets slashed on hike

The Bank of England faces a knife-edge decision on whether interest rates will be raised again.

The announcement will be made at midday on Thursday, with investors split over whether rates will increase following an unexpected fall in inflation.

Only half of investors are now predicting a rise, despite many previously expecting the 15th increase in a row to 5.5 percent from 5.25 percent.

Expectations changed after inflation, the rate at which prices rise, was revealed to have fallen unexpectedly to 6.7 percent in the year to August.

Any rise would mean higher interest rates on some mortgages and loans, but also higher savings rates.

The Bank has been hiking rates since December 2021 in an effort to tackle inflation in the UK, which is much higher than usual and putting households under financial pressure.

By making it more expensive for people to borrow money, it hopes households will cut back and buy fewer things.

It also might mean that firms will raise prices less quickly.

But it’s a tricky balancing act as raising rates too aggressively could cause people to cut back on their household spending which could see firms struggle for survival and economic growth slow.

The US central bank, the Federal Reserve held rates steady on Wednesday at 5.25%-5.5% as it too figures out whether enough has been done to tackle inflation.

Investment bank Goldman Sachs said it now expected interest rates in the UK to remain unchanged on Thursday after inflation was shown to have fallen.


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