Experts divided if the Bank of England will raise interest rates

It is expected that the Bank of England (BoE) could keep interest rates unchanged again this week and will remain at 5.25%.

James Smith, a developed markets economist at ING, believes that the monetary policy committee (MPC) meeting is likely to be highly predictable.

He said, “It would only take one committee member to change their mind to tip the balance in favour of more tightening – but we’re doubtful.”

However, experts at Investec said the MPC could still decide to raise interest rates, adding, that “the case for raising rates further now does look somewhat weaker to us than at the last meeting, for a number of other reasons.”

Susannah Streeter, head of money and markets, Hargreaves Lansdown, said, “As more homeowners are forced to take on big increases in monthly mortgage costs as their deals come to an end, the effect of financial fragility is likely to show up in more frugal spending patterns and more uncertainty about jobs moves and reticence when it comes to pay demands.

“Already the economy is flatlining, with growth proving very elusive, showing that demand is being squeezed out.

“Fresh weakness in the housing market, with prices continuing to fall, affects people’s perceptions of their wealth – and with house moves on hold, it won’t encourage spending on renovations and interior decor.

“If wage growth and goods and services price increases keep heading down, it’ll make policymakers more adverse to another hike.

“But given the stop-start nature of the downwards march of inflation and its very stubborn tendencies, any cut still doesn’t look likely until the second half of next year, particularly with oil prices remaining elevated among geo-political tensions.”