News Bank of England Holds Interest Rates Steady by Robert Mitchell - News Editor of Newsdirectory3.com January 31, 2026 written by Robert Mitchell - News Editor of Newsdirectory3.com “`html Saturday 31 January 2026 12:03 pm Share FacebookWhatsAppInterest Rate Cut Expectations Diminish Among Banks Table of Contents Interest Rate Cut Expectations Diminish Among Banks United Kingdom Economic Outlook and Bank of England Policy factors Influencing Bank Forecasts impact on Financial markets and Borrowers Banks are increasingly skeptical about imminent interest rate cuts,despite earlier predictions,as economic forecasts diverge and recent data suggests persistent inflation. This shift in sentiment comes as financial institutions reassess their projections in light of stronger-than-expected economic resilience and sticky price pressures. United Kingdom Economic Outlook and Bank of England Policy The Bank of England (BoE) has maintained a cautious stance on rate cuts, emphasizing the need for further evidence of sustained disinflation.Recent data indicates that while inflation has fallen from its peak, it remains above the BoE’s 2% target. The BoE’s Monetary Policy Committee (MPC) voted 8-1 to hold the bank rate at 5.25% on February 1, 2024, with one member preferring to reduce the rate to 5%. Bank of England Monetary Policy summary – February 2024 Several major banks, including JP Morgan and Goldman Sachs, have revised their forecasts, pushing back expectations for the first rate cut to the second half of 2024. Previously, many had anticipated a cut as early as spring 2024. This recalibration reflects concerns about wage growth and the potential for a resurgence in inflation. factors Influencing Bank Forecasts Banks are closely monitoring several key economic indicators, including labor market data, inflation figures, and GDP growth. Strong employment numbers and robust wage growth suggest continued demand in the economy, possibly fueling inflationary pressures. The Office for National Statistics (ONS) reported that UK regular pay growth (excluding bonuses) was 6.2% in the three months to December 2023. Labour market statistics – February 2024 Moreover, geopolitical risks and supply chain disruptions continue to pose challenges to the global economic outlook, adding to the uncertainty surrounding interest rate decisions. the International Monetary Fund (IMF) recently warned of increased downside risks to the global economy. World Economic Outlook Update, January 2024 impact on Financial markets and Borrowers The shift in expectations regarding interest rate cuts has already impacted financial markets, with bond yields rising and stock prices experiencing volatility. A delay in rate cuts could also affect borrowers, including homeowners with variable-rate mortgages and businesses with floating-rate loans. The average UK standard variable mortgage rate is currently around 5.26% as of January 2024. Moneyfacts – Variable Rate Mortgages Analysts suggest that the BoE will likely prioritize maintaining price stability over stimulating economic growth, even if it means delaying rate cuts. This cautious approach is intended to prevent a resurgence of inflation and ensure the long-term health of the UK economy. January 31, 2026 0 comments 0 FacebookTwitterPinterestEmail Home Business Entertainment Health News Sports Tech World
