LONDON.Dec 18–The Bank of England is expected to maintain interest rates at 4.75% on Thursday after the Office for National Statistics revealed that inflation in November rose to 2.6%, above the central bank’s target. Inflation increased from 2.3% to 2.6%, driven by higher petrol and clothing prices.
The central bank uses higher interest rates to combat inflation, encouraging families to spend more on borrowing rather than contributing to rising prices of goods. Another factor influencing inflation is rising wages, with pay packets growing at 5.2%, up from 4.9% three months ago, as reported by the Office for National Statistics earlier this week.
Money market traders have delayed their expectations for a rate cut to May, whereas previous market activity suggested a cut could have occurred in March. Commercial lenders, including high street banks and building societies, use the bank base rate as a benchmark for determining borrowing charges and saver rewards.
