MPC will feel continued pressure to cut rates if inflation falls further - Clifford (Stonebridge)

01 February 2024

Here are some comments on today’s MPC BBR announcement from Rob Clifford, Chief Executive of mortgage and protection network, Stonebridge:

“Few will be surprised by the Bank’s decision to keep BBR on hold this month. With last month’s slight rise in inflation, the Bank has likely opted to keep a watchful eye on the next set of figures rather than move too soon. While swaps have moved back up in the last week or so, the money markets still anticipate the Bank reducing rates throughout the year, with many economists forecasting at least two quarter-point cuts at some point. As the year progresses – and specifically if inflation falls further – there will be growing pressure to bring down rates, especially the closer it gets to its 2% target.

“Mortgage lenders spent the first half of January following each other in repeatedly cutting rates; however, this has slowed recently, and today’s BBR decision – and the rise with swaps – will mean we see a more consistent and static mortgage rate environment in the weeks ahead. There are many competitive rates available though and this current plethora of product choice, coupled with increasing consumer confidence, presents an optimistic outlook for mortgage brokers. It’s a far better rate environment than the one we were all wading through this time last year, hopefully providing both existing and would-be homeowners with cheaper mortgages than those we’ve seen available in the previous 12 months.”