Interest rates will still be at 4.5% next year, says expert panel of economists

Interest rates are likely to still be at 4.5 per cent by the start of next year, an expert panel of economists assembled byThe Bank of England’s Monetary Policy Committee will meet tomorrow and is expected to vote for no change, keeping rates at 5.25 per cent, with experts suggesting they could remain high for some time.

Higher rates for longer generally mean that mortgage rates stay higher, which mean bigger monthly costs. Even if an election was delayed until the latest possible date, in January 2025, rates would still be sitting relatively high.Annual growth in regular earnings – excluding bonuses – was 6 per cent in the period from December 2023 to February 2024, which is nearly double the inflation figure.

, said he still predicted three cuts to rates, as he did earlier in spring, but added that the timing of the first was “fuzzier” than before. “I don’t think the timing of the cuts are that important. But they matter politically, and I think the Bank will want to keep out of politics as much as it can. Given that the election is now most likely to be in October/November, the Bank might be tempted to make the first cut in the summer, possibly in August to coincide with the Monetary Policy Report, and then to make the second cut after the election.

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