Finance experts warn UK interest rates will not drop until next month due to lingering cost of living crisis

dailyrecord.co.uk:

UK borrowers may have to wait longer to see interest rates come down, as policy-makers look set to hold out for stronger signs that the cost of living crisis has subsided.

The Bank of England’s Monetary Policy Committee (MPC), which sets the level of UK interest rates, will announce its latest decision on Thursday.Interest rates are used as a tool to help bring down UK inflation, which has fallen sharply from the highs hit in 2022 when energy costs spiked and the cost of living crisis was at its peak.

The rate of Consumer Prices Index (CPI) inflation fell to 3.2% in March, according to the latest official figures from the Office for National Statistics (ONS).However, economists are widely expecting the committee to keep rates at the current level of 5.25% - a figure that has not changed since August last year.

This would mean borrowers holding out for costs to come down could have to wait longer before pressure starts to ease.At the last meeting in March, just one member of the MPC voted for rates to be cut by 0.25 percentage points, but the remaining eight members voted for no change.Philip Shaw, chief economist at Investec, said: “This broad direction illustrates that collectively the committee is moving gradually towards a rate cut.“It seems unlikely though to be ready to bite the bullet just yet and the Bank rate looks set to remain on hold at 5.25% for the sixth consecutive meeting.”He added that it is possible that a second member of the MPC will switch to the “easing camp” and vote for a cut on Thursday.But experts suggested that two key economic indicators for the Bank of England have ‘remained more stubborn’:Average wages continued to increase faster than the rate of inflation last month.Andrew Goodwin, chief UK