Interest rate cut could be on the cards

Last week, official figures revealed that the UK’s annual rate of inflation surged to a record high of 4.4% in July. Inflation is now at its highest level since current records began in 1997.

Consequently, hopes of an interest cut were slim as economists said the Bank will face an even tougher decision as inflation rises even further.

However, the Bank of England is now indicating that lower interest rates could be on the cards as it said the ‘upside risk to inflation had probably eased slightly over the last few weeks due to the fall in the price of oil.

In the minutes of the latest Monetary Policy Committee (MPC) meeting, it was revealed that there was a 3-way split among policymakers over the next move on rates.

Out of the nine members of the MPC, seven voted to keep rates unchanged, this included Governor, Mervyn King. However, David Blanchflower voted for a quarter-point cut, while Tim Besley voted for a rise.

Since December, the Bank of England have cut interest rates 3 times

According to economist, David Page of Investec Bank, the MPC in July appeared to be considering the need for higher rates, however the minutes seem to be the other way around this time.

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