"The Bank of England's decision to hold interest rates has effectively pressed the 'pause' button, and is the right call for long-term stability. Despite the gradual rate cuts seen last year, the surprise rise in inflation to 3.4% last month appears to have unsettled the more hawkish members of the BoE's MPC. However, mixed signals from the UK economy suggest further rate cuts are still likely in the coming months."
"By holding steady at 3.75%, the MPC is choosing to buy time, rather than risk reigniting price growth with a premature cut. Looking ahead, market focus now turns to the coming months. Sterling is expected to remain sensitive to the Bank's 'higher-for-longer' stance as we look toward April, which now appears to be the next window for the MPC to cut rates."
The Bank of England held Bank Rate at 3.75% while inflation rose to 3.4%, 1.4 percentage points above the 2% target. Lower inflation ahead and a softening UK labour market could support a move toward lower rates, possibly as early as next month. The Monetary Policy Committee paused to avoid reigniting price growth with a premature cut and is treating April as a potential window for reductions. Sterling is likely to remain sensitive to a 'higher-for-longer' stance. The rate hold provides breathing room for businesses, and anticipated cuts with cheaper borrowing aim to ease SME cost pressures and encourage investment. Banks, lenders and brokers must collaborate to improve SME access to finance.
Read at London Business News | Londonlovesbusiness.com
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