The Bank of England’s monetary policy committee has announced its latest base rate decision.
And as expected, it has kept the base rate at 3.75%.
Hopes in February that there would be another cut as soon as this month have been dashed by the uncertainty created by the Iran War.
In response to the news, Aaron Shinwell – chief lending officer at Nottingham Building Society – says: “The global economic landscape has become increasingly complex in recent months, with geopolitical tensions impacting financial markets and consumer confidence.
“ … The path forward is far less clear. Lenders have already begun adjusting mortgage rates in response to heightened market volatility, the longer term outlook still points towards gradual easing once the global situation stabilises.”
Joshua Elash, director of specialist lender MT Finance, comments: “Set against the dramatic backdrop of the conflict in Iran, this was the only expected outcome. It’s time to hold. This should be a brief measure.
“It is expected that visibility on a successful conclusion to the conflict with Iran will ease concerns on the impact rising energy costs are going to have on inflation. Only then would we expect the MPC to resume its previous course of gradual reductions to the base rate.”
John Phillips, chief executive of Just Mortgages, sees it this way: “It’s a relief to see the MPC sit on its hands at its first meeting since the Middle East conflict. Speaking with industry colleagues, there was certainly a worry that we would see the central bank react with a rate rise.
“That said, it’s hard to predict where we go from here and what the future path of interest rates now looks like.
“So much depends on how drawn out this conflict becomes and the impact it has on prices and inflation more broadly. We shouldn’t rule out the prospect of increases in the future.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, states: “Market expectations for two or three further quarter-point rate cuts this year resulted in a fall in Swap rates, which underpin the pricing of fixed-rate mortgages.
“Now, with market expectations that those reductions won’t happen, and a possibility that rates may even rise at some point, Swaps are extremely volatile and have edged upwards again.”
