LONDON (AP) — The Bank of England is expected to maintain interest rates at a 16-year high of 5.25% Thursday, but a cut wouldn’t be a huge surprise as inflation falls from multi-decade highs.
The consensus in financial markets is that a majority of the bank’s nine-member Monetary Policy Committee will hold off from voting for a cut — like the U.S. Federal Reserve last week — and will wait for more evidence that inflation is receding.
Headline inflation in the U.K. is down at an annual rate of 3.2%, its lowest level in two and a half years, but remains higher than the bank’s 2% target.
Economists believe inflation fell further in April, possibly to below 2%, as a result of sharply lower domestic energy bills, which could prompt some rate-setters to vote for a cut. At the last policymaking meeting, only one member voted for a cut.
Economists think that policymakers, still concerned about stubbornly high levels of pay growth and higher prices in the crucial services sector, will wait until the summer before supporting a rate cut.