With inflation continuing to fall, the Bank of England (BoE) is expected to keep UK interest rates on hold at 5.25% today.
The rate was left unchanged in September, ending a run of 14 consecutive rises.
According to financial markets, there is a 94% chance of “no change”, with just a 6% possibility of a 0.25% hike from the Monetary Policy Committee (MPC) to 5.5%.
It following the latest UK inflation, which stood at 6.7% in the year to September, unchanged from the previous month, but considerably higher than Threadneedle Street’s 2% target.
Yesterday, the US central bank held its key interest rate at its current 22-year high, while the European Central Bank (ECB) last week also hit the pause button on its rate-rise programme after previously hiking interest rates to record levels.
Mike Riddell, head of macro unconstrained at Allianz Global Investors, said: “UK economic activity appears to have slowed further, the housing market is weaker, consumer spending is falling, and inflationary pressure is showing further signs of dissipating. It’s only wage growth that has surprised to the upside, but this is unlikely to persist given other indicators of labour market weakness.”
“No doubt the BoE will signal that rates can still rise if economic data indicates a need, but as voting member Swati Dhingra recently highlighted, the long lags between changes in monetary policy and their impact on the economy mean that only up to a quarter of all the BoE hikes in this cycle have made a dent on the UK economy so far.”
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