Interest rate unlikely to change by end of the year

A recent industry report has suggested that the base interest rate could still be stuck at 5% by the end of the year, with soaring inflation levels putting pressure on the Bank of England to stop cutting rates. At the beginning of this year some industry officials had been predicting that the base rate could fall below 4% by the end of this year.

In a recent report the Centre for Economics and Business Research (CBER) has stated that at best there is likely to be just one more base rate cut this year, which would take interest rates down to 4.75% but the report also said that it was more likely that there would be no further interest rate cuts, and the base rate would not remain at 5% until the end of the year.

Whilst the slowing economy is cause for concern for the Bank of England, hence its decision to cut the base rate three times since December, taking it from 5.75% to 5%, inflation levels have now spiralled totally out of control, forcing the central bank to put a stop to the rate cuts.

Inflation now stands at 3.3%, which is way over the government’s 2% target, and officials predict that it could get much higher before the end of the year.