The UK’s headline inflation number fell to 2.6% in June, government data showed this week – but that could prove a short-lived fall, with oil prices jumping above $100 again after US president Donald Trump threatened massive attacks on Iranian infrastructure.
For now, rate hikes don’t seem to be on the table. Fifty-eight respondents to the Reuters poll believe the Bank of England will leave rates untouched for the next 12 months, with eight predicting a quarter-point hike and four expecting a 25-basis-point cut.
Speaking to Mortgage Introducer this week, mortgage professionals indicated they didn’t see the case for imminent rate cuts despite the latest drop in inflation.
Nouran Moustafa, executive financial and mortgage adviser at Roxton Wealth, suggested borrowers shouldn’t count on rate relief anytime soon – and pointed to a recent rate hike by “around 90%” of lenders in response to the latest escalation in the Middle East conflict.
Still, some Bank of England decisionmakers have sounded a cautious tone on rate increases despite inflation fears. Sarah Breeden, the central bank’s deputy governor, pointed to concerns around the strength of the economy as a reason to hold rates where they are.