The chance of a June interest rate cut was already low before an election was called, but in bad news for homeowners, economists say the 4 July poll could make one less likely
The Bank of England is expected to keep interest rates at 5.25% until at least August Photographer: Carl Court Provider: Getty Images Source: Getty Images EuropeThe bank’s Monetary Policy Committee will next decide whether to lower the base rate from its 16-year high of 5.25 per cent on June 20, just two weeks before the general election.
Michael Saunders, a former member of the MPC, and now a senior advisor at Oxford Economics said the election campaign would “reinforce the MPC’s desire not to surprise markets with an unexpected rate decision. They already have had a desire not to surprise markets, but it will be stronger now.” Chris Martin, a professor of economics at the University of Bath, added: “I wouldn’t rule out a cut in June, but I would be pretty surprised if there was one. I think the inflation data will nudge the MPC to delay their cuts to the base rate.
He said, however, that members of the MPC who wanted a rate cut would “not feel inhibited” by the campaign period. The average two-year fixed residential mortgage rate today is 5.91 per cent, according to Moneyfacts.
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