BOE Holds Base Rate Amid Ongoing Inflation Concerns

The Bank of England is set to announce its latest base rate decision, with industry figures expecting a hold. A better-than-expected inflation reading last week has helped cement the case for a hold at today's decision.

According to Mortgage Introducer, the general mood among industry figures speaking to them was one of cautious relief, with most welcoming the drop while flagging that it is unlikely to last. The energy price cap rose 13% at the start of July, and the conflict in Iran continues to cast a shadow over the inflation outlook for the rest of the year.

Ben Thompson of Mortgage Advice Bureau noted that the drop puts the BoE's next move back in focus, but also pointed out that weak domestic economic performance still argues against a rate rise. Alex Beavis of LHV Bank called it a likely temporary reprieve, pointing to Iran-driven energy costs as the key risk. Nathan Emerson of Propertymark acknowledged the progress but warned that household affordability remains under strain.

With market consensus and industry figures aligning in favor of a hold, any rate increase would be a surprise. However, some still believe rates will need to rise this year to keep inflation in check, including Huw Pill who has publicly expressed his belief that rates will need to rise.