Bank of England holds interest rates at 4.75%
UK central bank adopts cautious approach to avoid premature victory over inflation.
19th December 2024 12:12
by Myron Jobson from interactive investor
Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The Bank of England’s Monetary Policy Committee has left interest rates unchanged at its final meeting before the new year, taking a cautious approach to avoid prematurely declaring victory over inflation.
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“A concern for the Bank of England is that the inflation outlook is shifting once again. Measures announced in the October Budget, including significant government borrowing, increased public spending, and the rise in national insurance contributions for employers, are likely to add further pressure to inflation. Additionally, it remains unclear whether the higher tariffs on goods imports proposed by US President-elect Donald Trump would have an impact on UK inflation.
“For Britons, the latest decision to hold interest rates means mortgage rates, credit card rates, and loan rates could remain elevated for longer. However, inflation is also a significant burden on households, and the Bank of England argues that cutting rates too soon risks undoing the progress made in crushing rapid price rises.
“Meanwhile, the best savings rates appear to be on borrowed time. Barring any economic shocks, the only likely direction for interest rates is downward, which means Britons are set to earn even less on their savings in the future.
“The simple message for savers is to act quickly to secure the best deals before they disappear. Those who can afford to lock away their money for at least five years or more should consider investing for the potential of long-term, inflation-beating returns that far outstrip current savings rates.”
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