The UK interest rates are set to remain the same amid worldwide uncertainty and rising inflation.
The interest rate is set to stay at 4.25% following a jump in inflation in April.
Interest rates determine how much money people have to pay on loans or mortgages from a bank or a credit card.
This means home buyers eyeing up a property cannot expect the cost of borrowing to be slashed when the Bank of England decides on the interest rate figure on Thursday.
The decision will be made by the Bank of England’s monetary policy committee (MPC) next week.
It has voted to cut the rates at every meeting previously since it started easing borrowing costs last August.
The current rate has reduced from the earlier 5.25% at the height of the cost of living crisis.
British consumers faced the highest prices in 2023 during the height of the cost-of-living crisis, which is still gripping the country.
There was light at the end of the tunnel until inflation surged to its highest level for more than a year in April, the latest figures from the Office for National Statistics show.
Consumer Prices Index (CPI) inflation hit 3.5% in April, up from 2.6% in March.
The ONS said the April figure should have been 3.4 due to an error in vehicle tax collection.
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,’ she said.
‘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.’
Markets are bracing for potential turmoil after the escalating tension between Israel and Iran, which saw missiles being fired at sites in both countries.
The tension could have an impact on oil prices.
Meanwhile, the UK job market is seeing wage growth ease heading into April, while the unemployment rate grew as employers faced higher costs.
Rob Wood and Elliott Jordan-Doak, economists for Pantheon Macroeconomics, said the weaker job market could be a factor in reassuing the Bank of England’s committee that ‘it can plan on further rate cuts.’
But they said one month’s fresh data ‘is far from enough to allow the MPC to bin its gradual and careful approach to easing monetary policy.’
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