Three quarters (76%) of specialist brokers expect that the Bank of England’s Monetary Policy Committee (MPC) will keep interest rates unchanged later today, according to research from Landbay.
The brokers’ expectations align with broader economic opinion and widespread expectations – as brokers and lenders try to assess the central bank’s ongoing efforts to balance the control of inflation and the need to boost growth.
When asked “What do you expect to be the outcome of Thursday’s MPC meeting?” a fifth of brokers polled (20%) believe a rate cut is on the horizon. Most of those brokers (18% of the total) predicted a modest 25-basis-point reduction. A smaller, more optimistic cohort (2% of the total) anticipated a more substantial 50-basis-point drop.
UNCERTAINTY
Only 3% of the specialist brokers polled predicted a 25-basis-point increase in the base rate. These varied forecasts highlight the uncertainty that persists in the UK economy, even as inflationary pressures have moderated somewhat since their peak.
Rob Stanton, sales and distribution director at Landbay, said: “The consensus is clearly towards a hold at 4.5%, but a 25-point cut is not unjustified given GDP growth is limping along and needs support.
“Overall, the bank has been painting a pretty bleak stagflationary picture for 2025 and lower interest rates would mean millions of people will see an immediate drop to their mortgage rates.
“While controversial, two members of the MPC, pushed for a 50-point cut last time, so even that isn’t totally outlandish.
“Should interest rates remain unchanged, which is certainly what we are expecting, it might usher in a period of calm for the buy-to-let sector, which has experienced considerable instability recently with fluctuating borrowing costs and a shifting evolutionary landscape. A decision to hold rates steady could provide a stabilising force for landlords and property investors, who rely heavily on predictable financing costs to sustain rental yields.”
US RATES UNCHANGED
Last night the US Federal Reserve decided to keep interest rates unchanged.
George Lagarias, Chief Economist at Forvis Mazars, says: “The price of uncertainty is becoming all too tangible for investors and consumers.
“And US policy spillovers appear unavoidable. The Fed keeping rates, reducing the pace of quantitative tightening and signalling two cuts until the end of the year was all too expected.
“What is important is its outlook, which suggests less US growth and yet more inflation as a result of Washington’s new economic policies.
“Consumers and investors who were hoping for a quick de-escalation of rates in 2025 are now faced with a new economic reality of high interest payments against a backdrop of lower real growth.
“And central banks across Europe, which may see even weaker growth and lower inflation are now also faced with a dilemma: will they follow the US central bank in keeping rates higher, or will they desynchronise and risk capital outflows?”
