The Bank of England this week warned that it expects inflation to rise above 3% due to the rise in fuel, food and household energy bills. This is way above the 2% target and therefore makes drastic rate cuts unlikely.
Markets had expected rates to be cut to 4.75% by the end of the year - rates have been cut from 5.75% to 5.25% over the last 3 months. But the Bank are more concerned with soaring inflation rather than a possible recession.
Whilst this might be bad news for mortgage payers, net savers will be pleased that the rates aren't going to drop quickly.
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