Are Bank of England likely to hold interest rates?

Monetary Policy Committee will meet this week to once again assess current economic conditions and set official interest rates for the next six or so weeks.

Industry experts now widely predict the Bank of England will hold interest rates at the current rate, despite the European Central Bank making the decision to raise interest rates for the first time in nearly three years last week.

Ahead of Thursday’s meeting, Ross Boyd, the founder and director of Belfast-based chartered accountancy RBCA, said, “The Bank of England’s decision may not be as easy as some economists are predicting. The European Central Bank raised interest rates by 0.25 percentage points earlier this month – for the first time since 2023 - but they have a lower position now at 2.25 per cent. It’s a cautious stance, and as the impact the crisis in the Middle East will have on inflation is still uncertain, it’s a sensible one too.

 “I suspect the Monetary Policy Committee may not be as cautious. They will likely vote to keep interest rates where they are at 3.75 per cent this time around. To generate growth in the economy, lower interest rates are desired – this incentivises businesses to invest and encourages consumer confidence. However, the odds of a rate rise before the end of the year are increasing as the war unfortunately rages on disrupting oil supplies.

 “Businesses here in Northern Ireland, especially those in the labour-intensive service sectors, are likely to remain financially prudent as they continue to navigate this challenging climate. The latest evidence shows the economy is contracting, and whilst Reeves will continue to blame geopolitical events, economic stagnation is a problem. She should be making decisions geared towards creating an environment for growth in the UK. That means thinking of the hard-working business owner and implementing policies that maintain margins and encourage investment.”

For more information visit rbca.co