Bank Of England To Hold Rates Over Falling Inflation.

Bank of England is widely expected to keep interest rates unchanged at 5.25 per cent, but economists are divided on when the first cut that will come.

The central bank expects the consumer price index to return to its 2 per cent target in the second quarter, as the household energy price cap is once again lowered in April, while, the larger-than-expected fall in both the headline and core figures was welcome news for policymakers ahead of this week’s interest rate decision, though the Monetary Policy Committee has so far been reluctant to offer strong guidance on the timing of its first reduction.

The U.K. economy slid into a technical recession in the final quarter of 2023 and has endured two years of stagnation, following a huge gas supply shock in the wake of Russia’s invasion of Ukraine. Berenberg Senior Economist Kallum Pickering said that, the Bank will likely hope to loosen policy soon in order to support a burgeoning economic recovery.

He said, the risks to call are tilted towards fewer cuts in 2025, especially if the economic recovery builds a head of steam and policymakers begin to worry that strong growth could reignite wage pressures in already tight labour markets.