Home » Bank of England’s latest decision on base rate

Bank of England’s latest decision on base rate

Published: 01/02/2024

The Bank of England’s Monetary Policy Committee (MPC) has voted by a majority (6-3) to leave the base rate unchanged at 5.25% at its February meeting.

Two members of the committee voted for the rate to be increased to 5.5% and one voted for it to decrease to 5%.

In setting out the context to the vote, the committee said it has judged that monetary policy needs to be ‘restrictive for an extended period of time until the risk of inflation becoming embedded above the 2% target dissipates.’

It also referred to global GDP growth remaining subdued and the ongoing risk of developments in the Middle East and disruption to shipping routes through the Red Sea.

Dr David Crosthwaite, Chief Economist at BCIS, said: ‘Given the very slight uptick in the CPI announced two weeks ago, it’s no great surprise that they’ve decided to leave the base rate at 5.25%.

‘However, it is disappointing for the construction sector, and particularly for new construction, which is largely responsive to levels of investment. With financing costs remaining high, it’s hard to see how investment levels are going to rise in the short-term.

‘The bank’s cautious approach has no doubt been influenced by ongoing issues in the Middle East, with inflationary pressures likely to build given the attacks on shipping.

‘We’ll have to wait another six weeks to see if there’s any better news for our sector.’

The MPC will next meet on 21 March 2024.

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