The Bank of England has held the base rate at 5.25% but two members voted for a cut – signalling that we’re getting closer to a rate cut.
The base rate has been kept at its relatively high level in a bid to curb the inflation rate, which is expected to dip to 2% shortly, before rising again to 2.5% in the second half of the year.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “The comments and voting pattern around the decision are sometimes more interesting than the decision itself and clearly the direction of travel for rates is downwards when it is judged the right time to do so.
“The chances of even a small reduction resulting in runaway property prices or substantial rise in activity are slim, bearing in mind recent fairly flat activity.”
However Susannah Streeter, head of money and markets, Hargreaves Lansdown, reckons a cut won’t take place until at least the second half of 2024.
She said: “Given that the Bank says it wants to ensure that inflation returns ‘sustainably’ to target, the implication here is that a June rate cut may still be too close for comfort for some policymakers.
“Upcoming economic data will be scrutinised closely in the weeks to come, and certainly a June rate cut can’t now be ruled out, but August remains more probable.”
Richard Beresford, chief executive of the NFB (National Federation of Builders), expressed disappointment at the Bank holding the base rate at 5.25% again.
He said: “The decision by the Bank of England to maintain interest rates continues to hinder productivity and economic recovery.
“Due to the size and nature of works, the construction industry relies on borrowing and financing for projects, and high interest rates can hamper its ability to secure strong pipelines of work and invest in growth.
“This announcement comes at a time when construction already faces considerable challenges in material inflation, planning delays, and energy costs.
“We, therefore, urge the government to deliver greater strategic reform in planning, procurement, and regulation to ease these difficulties and create a favourable environment that allows our sector to drive investment, growth, and UK productivity.”
The Bank has kept the base rate at 5.25% since August 2023, following a period of 14 consecutive increases.
