Inflation has reached the target rate set by the Bank of England for the first time in almost three years and that has brought hope of lower interest rates. Inflation in May was reported at 2.3% and declined to 2.0%, which is the target rate. Tomorrow, the Bank’s Monetary Policy Committee (MPC) will be meeting to consider whether lowering the standard base interest rate is needed or it should hold steady. Raising the base rate to curb spending and bringing inflation to the target level of 2.0% has been the goal of the MPC, but it is not yet time to cut rate so say experts.

Next week is the June meeting of the Bank of England’s Monetary Policy Committee (MPC). It will be held a day after the data on the current state of inflation is shared. Last month inflation reached closer to the target rate of 2.0%, falling from 3.2% to 2.3%. However, as close it fell to target it was short of the forecast for 2.1%. Depending on the inflation report released on 19 June, the MPC will vote to either keep the current standard base rate steady or offer an earlier than expected surprise cut.

The scheduled meeting of the Bank of England’s Monetary Policy Committee (MPC) is next week. It is the meeting that had once been considered to result in a cut to the standard base interest rate. However, the forecasts leave little hope for that to happen. The current rate of 5.25% will likely be voted to stay in place by the majority of the members. Without a meeting scheduled for July, the next hope will be for one in August. 

According to those on the inside of the housing market, purchases appear to be slowing down. This is a surprising outcome due to the recent strength of demand shown in the market only last month. It could be hopeful home buyers are not backing away from the market but simply waiting out for the Bank of England’s Monetary Policy Committee (MPC) to cut the standard base interest rate. When that could happen is either likely this month or in August.

There had been hope of a cut by the Bank of England’s Monetary Policy Committee (MPC) to the standard base interest rate by early spring. As inflation held on, optimism declined and the forecast was for one possibly in June. However, now it is more likely to be in August according to experts. Lenders had been cutting their own offerings, but as the expectation for a June reduction of the base rate has been replaced with one later, lenders have begun to raise their rates.

According to a recent report from Rightmove, mortgages rates are lower than they were a year ago. The cheaper lender rates have come onto the lending market without a cut in the standard base interest rate by the Bank of England’s Monetary Policy Committee (MPC). The reasoning for the lower rates is due to the optimism for inflation to reach target and the committee to vote for the first cut to the base rate since March 2020. The lower lender rates available are an opportunity for borrowers to secure deals that would likely appear when the MPC does cut the rate.