Published Article

HeadlineUK tax cuts expectations lowered while Bank of England holds interest rates at 5.25%

Short HeadlineBank of England holds interest rates at 5.25%

StandfirstUK tax cut expectations were lowered as the Bank of England announced a remaining 5.25% in interest rates.

Chancellor Jeremy Hunt has reduced expectations of UK tax cuts in his March Budget while the Bank of England decided to hold interest rates at 5.25%.

This is the forth time the Bank of England has decided in London to keep the interest rate.

Two members of the Bank’s monetary policy committee (MPC) voted for an increase, one wanted a cut, and the majority voted to maintain the interest. The rate is at its current highest level in almost 16 years.

Lower interest rates mean people have more money to spend,  increasing inflation.

It also reduces the amount charged on credit cards, meaning less interest is earnt on savings.

Londoners will have to wait six weeks, which is how often the Bank of England takes decisions.

The Bank’s final report states that inflation is expected to decrease in the next six months, but may rise again “somewhat” later in the year.

Bank’s governor Andrew Bailey said that things are moving in the right direction.

As for tax reduction, the Treasury’s analysis shared last week estimated a limited scope for tax reduction.

The International Monetary Fund (IMF) also warned the Government about tax cuts being “unrealistic”.