The BoE expects to leave rates unchanged next week – what this means for you

The MPC will meet this week to decide whether the economy is showing the signs it wants to see before it starts cutting interest rates.

But economists say that, as things stand, only one member of the nine-member committee is likely to think conditions are right for a cut.

The Bank has indicated at recent meetings that cuts are likely in the future after interest rates have been raised or left unchanged at each meeting for the past four years.

When the group met in February, only one of them, Swati Dhingra, voted for a rate cut.

Two voted for an increase, but the rest said they should stay at 5.25%.

Robert Wood, chief Britain economist at Pantheon Macroeconomics, said he expects the same mood this time.

Mr Wood said: “The MPC focuses on ‘tightness in labor market conditions, wage growth and service price inflation’ to assess ‘how long bank rates should be maintained at current levels'”.

“We believe the data did not surprise enough to trigger a change in guidance at the MPC meeting on March 21.

‘The Bank will continue to signal interest rate cuts, but with little news on the timing.

“We expect the same 1-6-2 (cut-hold-hike) vote as last month,” he said.

Since that last meeting, gross domestic product (GDP) data for December showed the UK economy contracting by 0.3%, pushing it into recession.

That was worse than the 0.0% move the MPC had expected.

Both unemployment and consumer price index inflation have also been lower than the MPC expected in its February forecast.

Figures from the Office for National Statistics (ONS) show that the annual rate of price increase remained at 4% in January.

Mr Wood said: “On the whole, the data since the last meeting of the MPC confirms the predictions – rather than questioning them.

“In February, MPC forecast inflation would fall to 1.4% over two years if rates remained restrictive at 5.25%. Policymakers just need the confidence to rely on these forecasts.”

New consumer price index inflation figures for February will be released by the Office for National Statistics on Wednesday.

The Bank will have these figures before making a decision.

What an interest rate pause means for your money

Below we reveal more about what a rate break could mean for your money.

Mortgages

When interest rates rise, it usually means that your mortgage costs will increase, depending on the type you have.

Those with fixed rates are usually safe for now until they remortgage.

But other mortgages, such as a tracker or standard variable rate (SVR) mortgage, can also be directly affected.

Homeowners with an adjustable-rate mortgage may not see their payments increase immediately, but they are likely to increase shortly after interest rates increase.

But the exact amount depends on your loan and your loan-to-value.

However, if the BoE chooses to freeze current interest rates, your lender may choose to do nothing at all.

This will come as a huge relief to those who have experienced fourteen consecutive increases in their mortgage bills.

Either way, your bank should warn you of any increase in your rate before it goes up.

Here you will find more information about how to find the best mortgage rate.

Credit card and loan rates

Here too, the cost of borrowing through loans, credit cards and overdrafts may increase if the base interest rate is increased, because banks are likely to pass on the increased interest rate.

Certain loans you already have, such as a personal loan or car financing, usually remain the same because you have already agreed on the rate.

But rates on future loans could be higher, and lenders could increase rates on credit cards and overdrafts – although they should let you know in advance.

If interest rate increases are halted again, nothing will likely change.

However, you can still cancel a credit card if you wish. You then have 60 days to pay off the outstanding balance.

Savings rates

Savers are the most important group that has actually benefited from the last fourteen interest rate increases.

That’s because banks tend to enter the fray by offering market-leading interest rates.

Although banks usually take action much slower than when they pass on higher interest rates.

If the base rate does not rise, banks will probably benefit from this and also leave their interest rates unchanged.

Anyone currently getting a low rate on easy-to-access savings might find it worth shopping around for a better rate and moving their money.