Interest rates – live: Bank to make decision after high inflation figures

The MPC’s meeting is due from 12 noon and we should hear right away about the latest interest rates call.

As a reminder, we’re currently at 4.25 per cent base rate.

The last cut came in May and we’re expecting a hold decision this time around.

It’s not just the Bank of England with this decision today over to cut, hold or raise interest rates. Here’s what has happened around the rest of the world of late:

• The US Fed opted to hold at 4.25-4.50 per cent last night
• Norways’s central bank today took a surprise cut for the first time in five years, to 4.25 per cent
• Taiwan have opted to hold at 2 per cent
• The Swiss national bank cut a quarter point to zero in an expected move as inflation falls
• Earlier this month, the European Central Bank cut interest rates on the deposit facility, main refinancing operations and marginal lending facility to 2.0pc, 2.15pc and 2.40pc respectively

UK Finance data shows over a million people are on tracker mortgages or standard variable rate mortgages at present – either band could be affected by a change in interest rates.

Some homeowners may have been waiting to see if rates come down further before committing to a new fixed rate term, with analysis showing 1.6m fixed rate mortgages are due to end during 2025.

Workings show a 0.25pc reduction to the base rate could equate to around £28.97 a month lower repayments based on those on an average tracker product, or £13.87 for those on SVR deals.

Worth a check-in on the markets ahead of the interest rate decision – and it remains a day fully in the red, across London’s markets and onto the continent.

• FTSE 100 down 0.22 per cent
• FTSE 250 down 0.64 per cent
• AIM down 0.26 per cent
• France’s CAC 40 down 0.61 per cent
• Germany’s DAX down 0.33 per cent
• Euronext 100 down 0.5 per cent

Until there’s more clarity over tariffs, the US involvement with Iran, oil prices and one or two other factors, this might be the direction of travel for a while.

We’ve already explored how the expectation is for interest rates to be held today and cut in future.

But much of that is based on what was happening over the past few months, not the escalations we’ve seen this month.

Could they in fact go back up? Maybe not today – but don’t rule it out in future.

“Central banks are in a ‘wait and see’ mood with regards to interest rates, despite broad concerns about a weaker economic outlook,” says Russ Mould, investment director at AJ Bell.

“The Fed kept US rates unchanged at its meeting yesterday and the Bank of England is expected to do the same with UK rates later today.

“[Investor] markets have plenty of other things to focus on, namely the Middle East conflict which shows no sign of easing.

“Oil prices have shot up in recent days and any disruptions to Middle East supplies could put them even higher and stoke inflation.

“Remember that central banks fight inflation by putting up interest rates, not cutting them, which muddies the water in terms of trying to second guess what will happen next to borrowing costs. Rates staying higher for longer is bad news for investors and so the more intense the Middle East conflict gets, the greater the potential for increased market volatility.”

Amazon bosses have told staff that some employees will lose their jobs over the coming years as they step up the use of Artificial Intelligence.

The company employs around 1.5m people around the world, with more than 60,000 estimated to be working in the UK.

A memo from chief executive Andy Jassy to staff did not clarify the number of roles which would be handed over to AI control, but said there would be an inevitable change over what work would be carried out by people and what could be left to agentic AI.

Ivo Mertens, Chief Economist at iBanFirst, has detailed currency movements ahead of the Bank of England’s interest rate decision.

The US dollar continues to weaken and wider geopolitical influences could impact going forward.

“As the Bank of England meet once again to make a rates decision, the euro continues its rise against a dollar weakened by trade and geopolitical uncertainties, and general investor anxiety as Trump’s 90-day truce draws closer,” he said.

“EUR/USD has extended its rally, recently hitting a new high at 1.1632, while GBP/USD climbed to 1.3634.

“While markets expect a status quo from the Bank of England, the hawkish stance taken by the ECB could continue to support the single currency. Although rising energy prices linked to the Israel-Iran conflict and U.S. immigration policy could influence inflation and rate expectations.

“If markets start to factor in these dynamics, it could lead to a rebound in U.S. interest rates. In that context, only a spike in inflation or a flare-up in geopolitical tensions that triggers safe-haven flows may support the dollar in the medium term. For now, however, the downward trend for the greenback appears firmly in place.”

As AIM turns 30, Nicholas Hyett, investment manager at Wealth Club, has some thoughts over reasons to be positive about its future:

• Increasing listed companies in the coming years
• Inheritance tax benefits (for now)
• The end of US exceptionalism
• Valuations suggestion potential 40% gains over the next few years
• The fact departures should broadly be welcomed

While AIM has its detractors and certainly has seen many businesses leave and not be replaced, Mr Hyett points to the positives.

“One of the reasons AIM, and the UK more generally, has struggled is that valuations for UK listed companies are so much lower than in the US,” he said.

“That could be changing, recent months have seen the value of US companies fall slightly versus the rest of the world – suddenly the UK isn’t a bargain basement anymore. Companies staying around longer means more opportunity for UK investors to benefit from their growth.

“AIM’s IHT benefits have been a major source of discussion, and yes they’ve been halved in the last 12 months. Nonetheless, as things stand, AIM shares remain the only way to reduce the inheritance tax due on your ISA – often someone’s largest asset outside their home and pensions and potentially a source of a lot of death duties.”

A key consideration for the Bank of England ahead of today’s interest rates announcement will be oil prices.

Figures yesterday showed lower fuel and air fares were among the factors leading to very marginal lower overall inflation, but since May the price of oil has risen significantly.

Israel-Iran tensions and the prospect of the possible closure of a key shipping route has seen Brent Crude rise to almost $77 – it’s up 0.23 per cent today, with Crude Oil also up 0.59 per cent to $75.58.

Over the last two months those prices have been around the low-to-mid 60s.

Higher oil prices tend to lead to higher inflation down the line.