Bank of England expected to keep interest rates at 3.75%

The Bank of England is expected to keep its main interest rate at 3.75% when policymakers meet, according to a Reuters survey of economists.

All 70 economists questioned predicted no change at the next decision. Many also believe rates could remain at their current level for another year because inflation is still running above the Bank’s 2% target.

Interest rates influence mortgage payments, business borrowing and the returns paid to savers. Holding rates steady can help restrain prices, but it also means households refinancing mortgages may continue to face higher costs than they were used to before the inflation surge.

Recent data showed UK inflation easing to 2.6% in June, helped by lower fuel prices during a temporary reduction in Middle East tensions. Economists warn that energy prices and global instability could push it upwards again.

The Bank will weigh those risks against signs that economic growth remains fragile. Its accompanying forecasts should offer clues about how long policymakers expect the pause to last.

Original reporting: Reuters ↗