As we wrap up the year, the Bank of England has decided to hold interest rates steady at 4.75%. Guest presenter Simon Cockfield walks us through the implications of this decision, shedding light on the economic factors at play.
Inflation on the Rise
November saw the Consumer Prices Index (CPI) rise to 2.6%, marking an eight-month high and surpassing the Bank’s 2% target. Core inflation, which excludes volatile items like food and energy, also increased to 3.5%. This rise in inflation, driven by higher fuel and grocery costs, along with increased tobacco duty, has left the Bank cautious.
Economic Stagnation
Despite signs of economic fragility, including zero growth forecasts for the final quarter of 2024 and the fastest rate of job cuts since 2021, the Bank of England opted not to reduce rates. With wage growth at 5.2%, inflationary pressures remain high, adding complexity to an already challenging economic environment.
What’s Next?
Andrew Bailey, Governor of the Bank of England, has hinted at future rate cuts, but warned they won’t come quickly. Mortgage holders and prospective buyers should brace for continued uncertainty, particularly as lenders review rates and the stamp duty rise looms in 2025.
At Citrus Financial, we recommend consulting with a mortgage broker to navigate these challenging times. Stay tuned for more updates in January 2025, when regular presenter Richard Harris returns.
From all of us at Citrus Financial, we wish you a Merry Christmas and a prosperous New Year!
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