Bank of England may not raise rates this week

Markets and experts generally expect the Bank of England’s (BoE) Monetary Policy Committee (MPC) to keep the bank rate at four percent following its next meeting this week (23 March).

Investors began to bet on a rate hold following the turmoil in the banking sector and the failure of US tech lender Silicon Valley Bank (SVB).

SVB’s UK arm was sold to HSBC for £1 last week.

At its last meeting on 2 February the MPC increased the bank rates by 0.5% to four percent.

The purchase of Credit Suisse by UBS has also added to speculation that the bank rate will stay put.

Interest rates have been steadily rising in a bid to help curb inflation, which is currently sitting at 10.1%.

However, the Chancellor Jeremy Hunt said in his Budget statement on Wednesday that forecasts suggest that inflation would fall to 2.9% by the end of the year.

However, research from Deutsche Bank has revealed that some analysts do indeed believe that the MPC will raise rates to 4.25%, but says that it will be the final base rate raise in this cycle.

A spokesperson for Deutsche Bank said: “Our call remains finely balanced, however, particularly with global uncertainty heightened and financial stability risks elevated.

“To be sure, we think that the bar for a pause in March is a lot lower, relative to the Fed or ECB, given the BoE’s more dovish forward guidance in February.”