Interest-rate hold means a cruel summer for borrowers

Struggling homeowners may have to wait until autumn for the Bank of England to ease pressure, writes James Moore

- James Moore

“Finely balanced” was how the Bank of England’s rate-setting Monetary Policy Committee (MPC) described its decision to hold interest rates yet again. The election? Absolutely, positively, nothing to do with the decision, it said.

With the Bank in purdah, there were none of the usual commentaries or press conferences to accompany the decision, so there’s even more guesswork than usual in relation to when the much-anticipated rate cut might finally come.

What we do know is that the vote went seven to two in favour of standing still; one of the Bank’s deputy governors, Dave Ramsden, joined interest rate dove-in-chief Swati Dhingra in calling for an immediate cut. The seven others have “a range of views” on what should happen next and how restrictive the Bank’s stance should be.

Among the hawks, there were concerns that inflation’s return to the target of 2 per cent was “welcome” but not necessarily “indicative of the required sustained return to target”. To have inflation return to around 2 per cent sustainably is what matters to the MPC, which took considerable heat for acting too slowly to contain last year’s inflationary spike.