“Today’s decision to keep interest rates unchanged comes amidst a backdrop of heightened domestic uncertainty ahead of next month’s increases in labour and energy costs. Data has also been limited since the February meeting, particularly with the absence of updated forecasts. This strengthened the case for the Bank to maintain its cautious approach and keep interest rates on hold.
"Recent external developments are also contributing to the uncertain outlook. Downside risks to growth from potential tariffs have increased, while they also pose an upside risk to inflation if sterling weakens causing higher import costs.
“Nonetheless, the meeting minutes suggest there is a clear easing bias, despite eight MPC members voting to keep rates unchanged. The tone signals further cuts remain on the table this year, barring a deterioration in the underlying inflation outlook. We expect the Bank to be able to resume cutting interest rates in the upcoming May meeting as it digests the updated forecasts and data over the coming weeks. Overall, we expect base rates to fall to 4% by the end of 2025.”
