The Monetary Policy Committee voted unanimously to hold rates at 3.75% albeit will continue to closely monitor the situation in the Middle East and its impact on global energy supply and energy prices.
The Committee have said they stand ready to act as they need to, to ensure that CPI inflation remains on track to meet the 2% target in the medium term.
Andrew Zanelli, Head of Technical Engagement at Aberdeen Adviser, said: “Until recently, the Bank of England was expected to cut rates but in response to events in the Middle East a hold became the expectation, indicating policymakers are giving themselves time to see how the conflict plays out before deciding what direction rates should take next.
“Some consumers are already seeing energy prices and mortgage rates increase and may need to reassess their financial plans as a result. In uncertain moments such as these, professional financial planners and advisers can really prove their worth.
By speaking to an adviser, consumers can not just understand what’s going on but also consider their choices within a longer- term strategy and make sure their money is working as hard as it possibly can.”
Daniel Austin, CEO and co-founder at ASK Partners, has said: “The Bank of England’s decision to hold rates at 3.75% reinforces the ‘higher for longer’ reality facing households and property markets.
“While policymakers continue to signal potential cuts later this year, the recent uptick in inflation and renewed geopolitical tensions in the Middle East underline just how uncertain the path back to target remains.
“Any escalation that pushes up energy prices or market volatility could easily complicate the disinflation story, leaving confidence fragile among buyers and developers alike.
“Mortgage pricing has improved and further easing would be welcome, but it will take time for meaningful relief to filter through to household finances and borrowing costs.
“In the meantime, mainstream housing activity is likely to remain subdued, with capital continuing to favour structurally resilient, income-led sectors such as build-to-rent, co-living, logistics, storage and data centres, where persistent undersupply continues to support demand.”
In response to the MPC’s ‘ready to act’ position, Lindsay James, Investment Strategist at Quilter has commented: “It would appear there are concerns about the inflation path with ‘all members standing ready to act’ in order to contain price rises. Interest rates may be held for now, but it seems hikes are likely to be coming.”
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