Michael Race
Business reporter, BBC News
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The Bank of England has warned economic and global trade uncertainty has “intensified” as it held UK interest rates at 4.5%.
US trade tariffs and retaliation to the import taxes from the likes of the EU have created uncertainty for countries, the Bank said.
Its decision to hold rates was widely expected, but governor Andrew Bailey said the Bank still believed rates were “on a gradually declining path”.
Economists are predicting two more rate cuts by the end of the year, with many suggesting the next could come in May.
Mr Bailey reiterated it was the Bank’s job “to make sure that inflation stays low and stable”. Inflation, which measures the rate at which prices rise, currently remains above the Bank’s 2% target, at 3%.
The Bank’s Monetary Policy committee (MPC), which sets rates, voted by a majority of eight to one in favour of holding at 4.5%.
The base interest rate dictates the rates set by High Street banks and lenders. The relatively higher level in recent years has meant people are paying more to borrow money for things like mortgages and credit cards, but savers have also received better returns.
About 600,000 homeowners have a mortgage that tracks the Bank’s rate, so the latest decision will not have any immediate impact on monthly repayments.
More than eight in 10 customers have fixed-rate deals, so they face higher repayment costs when deals end.
Mortgage rates have been edging down recently. On Thursday, the average two-year fixed mortgage rate was 5.33%, while the average five-year fix was 5.18%.
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