The base rate has been held at 5.25% since August 2023. Falling inflation had raised hopes that the Bank of England may look to start cutting the cost of borrowing as early as March. But will a surprise slight rise in inflation in December dampen those hopes?
Inflation has fallen significantly through 2023. With wage growth slowing more than expected and the economy stagnating, speculation has been rife that the central bank will start cutting rates sooner.
However, December’s CPI inflation figure rose unexpectedly for the first time in almost a year, albeit by a small 0.1% to 4% – double the 2% target. The Bank of England has also been keen to stress that rates will not be coming down anytime soon.
If you have a fixed-rate mortgage deal coming to an end soon, or you’re on a standard variable-rate or tracker mortgage that follows the base rate, you’ll be keeping a keen eye on where it will head next and when.
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