The Monetary Policy Committee (MPC) has voted to hold base rate at 3.75% for the fifth consecutive meeting.
Inflationary concerns remain and the expectation is that prices will rise further. While June’s fall in CPI inflation to 2.6% came as a welcome surprise, there are other factors to consider. Concerns for the labour market and wider economy persist, as well as secondary effects caused by renewed hostilities in the Middle East.
Unlike the last meeting in June where two members voted for a quarter-point increase to 4%, this time around three members favoured such a rise. The Committee said it ‘stands ready to act as necessary to ensure that CPI inflation remains on track to meet the 2% target in the medium term.
Commenting on the decision, Mark Harris, chief executive of SPF Private Clients, said:
“Prevailing caution feels the right response for now, with a steady hand on the tiller rather than a knee-jerk reaction to raising rates, which is vital for overall market stability and confidence.
“Despite the rate hold, borrowers still have to contend with an upwards trajectory in mortgage pricing, with a number of lenders increasing rates on their two- and five-year fixes. Mortgages are more expensive than they were a month ago, so affordability concerns remain.
“Independent advice from a broker such as SPF Private Clients is more important than ever, as is securing a rate as soon as possible with the option of reviewing it before completion to see whether there is a better product available at that time. Get in touch with SPF Private Clients to find out what options are available to you.”
