UK Inflation Expected to Report Under Bank Goal
The UK inflation rate is expected today to be reported as still under the goal level of 2.0%. Inflation is one of the many factors that play heavily on the Bank of England’s Monetary Policy Committee’s (MPC) decision to make a change to the standard base interest rate. Sitting unchanged since March 2009, warnings are probably the strongest since the recession that the rate will be adjusted in early half of 2016.
The goal rate for inflation is 2.0%, but it has remained close to zero throughout this year. Inflation fell into negative in April which was the first time for that to occur in over five decades. The report is expected to show inflation remained at minus 0.1% for October in regards to the consumer price index (CPI).
With inflation still at a negative level, it confirms what has been predicted in that the MPC will allow the year to close out with their rate still at 0.5%. Yet, the UK economy is on track to continue performing well and that will push the MPC to possibly raise the rate within the first half of next year.
Lenders though are not likely to wait as long to change their rates. Currently competitiveness is keeping offers of mortgages and remortgages connected to cheap interest rates, but that may change due to the state of the global economy. When lenders begin to pull their cheapest deals or tighten their lending practices, home buyers and home owners that wait will find they may have missed out on a perfect opportunity to secure a long term fixed rate.