John Charcol’s Ray Boulger believes it was right not to reduce rates just yet, but a rate cut is getting closer. “As yesterday’s no change decision by the MPC was expected, the content of the Bank of England's Quarterly Inflation Report due to be published next Wednesday will perhaps be even more interesting than today’s decision. The MPC will have been aware of most, if not all, of the content of this report and it should provide a good indication of the near term trend in bank rate.
“The fall of nearly 20% in the oil price from its recent peak, coupled with a sharp fall in other commodity prices, provides some optimism that inflation will start to fall later this year, giving the MPC scope to resume their rate cutting to try to fend off recessionary risks.”
Ivy Pinner, director of business development at Charles Stanley Stockbrokers, also believes rates will start to come down soon: “Overall it is reasonable to expect the inflation rate to peak early in the autumn and to permit one possible cut in base rates before the end of the year."
