The Bank of England is set to announce its economic forecast today, Thursday, against the backdrop of an unchanged interest rate at 5.25%, a struggling UK economy, and rising concerns of a potential recession. This follows the Monetary Policy Committee's (MPC) decision in September to halt a series of 14 consecutive rate hikes since December 2021. The move was initially designed to counter stubbornly high inflation that had reached a peak of 11.1%. Although inflation has since reduced, it currently sits at 6.7%, more than three times the bank's target of 2%.
The decision to hold the base interest rate offers some respite to homeowners dealing with mortgage costs. Market experts widely predict the interest rates to remain steady today as well. Economists are keeping a close watch on the MPC's economic outlook and any hints towards a possible recession.
The bank's September meeting was marked by a significant GDP growth revision for Q3 2023, downgraded from 0.4% to a mere 0.1%. This substantial downward adjustment reflects subdued economic activity and serious concerns about the economic future. The committee also recently lowered its Q4 2023 GDP growth forecast to just 0.1%, a significant reduction from the previous month's estimate of 0.4%.
The upcoming announcement by the Bank of England and Royal Exchange is being closely monitored due to its potential implications for the UK economy.
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