Interest rate Feb 26

The Bank of England has voted to keep interest rates on hold at 3.75% following this week’s MPC meeting.
Borrowing costs remain unchanged as policymakers weigh rising inflation, which increased to 3.4% in December for the first time in five months, against the wider economic outlook. The decision was narrowly split with the MPC voting 5 to 4 in favour of holding rates. Four members backed a 1/4 point cut which would have reduced rates 3.5%. Despite the increase in inflation the split MPC vote suggests that rate cuts would follow in March and more likely in April if price pressure eases. Bank of England Governor cover Andrew Bailey who voted to hold said he could “see scope for some further easing of policy”
Our thoughts
What matters is the tone of the message rather than the decision. The sentiment is that the direction of travel for rates will be downward.
Given the rise in inflation in December, it is understandable that rates have been held this time around and reflects a period of growing stability in the mortgage market.
Recent house price data shows modest growth with transaction activity picking up.
Weak economic outlook is still likely to balance overall market confidence with house price inflation expected to be in the low single figures this year.