The Bank of England has warned economic and global trade uncertainty has “intensified” as it held UK interest rates at 4.5%. US trade tariffs and retaliation to the import taxes from the EU have created uncertainty for countries, the Bank said. Its decision to hold rates was widely expected, but governor Andrew Bailey said the Bank still believed rates were “on a gradually declining path”. “There’s a lot of economic uncertainty at the moment,” he added. “We’ll be looking very closely at how the global and domestic economies are evolving.” Mr Bailey reiterated it was the Bank’s job “to make sure that inflation stays low and stable”. Inflation, which measures the rate at which prices rise, currently remains above the Bank’s 2% target, at 3%. The Bank’s Monetary Policy committee (MPC), which sets rates, voted by a majority of eight to one in favour of holding at 4.5%. The base interest rate dictates the rates set by High Street banks and lenders. About 600,000 homeowners have a mortgage that tracks the Bank’s rate, so the latest decision will not have any immediate impact on monthly repayments. More than eight in 10 customers have fixed-rate deals, so they face higher repayment costs when deals end. Mortgage rates have been edging down recently, primarily because the markets and lenders expect further rate cuts this year, with analysts predicting two more cuts by the end of 2025. While inflation is much lower than in recent years, households are still feeling the pain of higher prices and are set to be hit by a host of higher bills for water, energy and council tax from April.
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