Interest rates could be held as inflation increased in April

On Thursday the Bank of England’s Monetary Policy Committee (MPC) might vote to keep interest rates at 4.25%, economists are predicting.

This comes as inflation rose in April and policymakers remain “nimble” to economic backdrop.

The MPC has voted to reduce rates at every other meeting, which has been possible as the inflation was steadily falling.

But in April inflation increased to its highest level in over a year, according to recent data from the Office for National Statistics (ONS).

Ellie Henderson, an economist for Investec, said monetary policy “seems to be in a good position, allowing the Bank of England to wait and see how economic conditions and the international political backdrop evolve.

“Ultimately, this is a highly uncertain time that requires a potentially nimble response from central banks, limiting any great foresight.

“Although the June decision might seem clear cut, how the MPC responds to the evolving economic backdrop thereafter much depends on the details of the world in which we find ourselves.”

Rob Wood and Elliott Jordan-Doak, economists for Pantheon Macroeconomics, said a weaker jobs market “will reassure the MPC that it can plan on further rate cuts.”

He added, “one month’s data is far from enough to allow the MPC to bin its ‘gradual and careful’ approach to easing monetary policy.”