The chance of the Bank of England deciding to cut base rate today and thus trigger further interest rate cuts, is on a knife-edge according to an investment platform.

The Bank’s monetary policy committee meets this morning with a decision at midday – the decision will be covered here on Letting Agent Today. 

Speculation that a cut will be agreed by the committee – its first in more than four years – has been ramping up in recent days. Base rate has been at a 16-year-high of 5.25% for 12 months amid lingering inflationary pressures in the economy.

Alice Haine, an analyst at the Bestinvest platform, says: “UK Inflation may have held at the BoE’s target level of 2% in the 12 months to June but the central bank will have concerns about other measures of underlying inflation which remain stubbornly high. These include sticky services inflation, a crucial driver of overall inflation, which remained at 5.7% in the 12 months to June, the same level as the previous month, while wage growth, which is easing, remains hotter than hoped and continues to outpace price rises. 

“Throw in stronger economic growth in May, with gross domestic product expanding by 0.4% in May, double the expected figure, set against a picture of rising unemployment, which now stands at 4.4% – something that may help to ease wage pressure – and it’s easy to see why the BoE has a difficult decision on its hands.”

Haine says a cut, if it comes today, would boost the government’s drive for growth. 

She continues: “If a rate cut does materialise this week, the next question is whether there will only be one rate reduction this year or more – something that will be determined by what inflation does next. The headline rate is expected to nudge up again later in the year as favourable base effects fall out of the equation while Rachel Reeves’ public sector pay rises have the potential to deliver an inflationary effect, so the BoE is likely to tread very carefully when it comes to the timing of its next rate move. 

“While a rate cut won’t be the answer to everyone’s prayers, it would mean those with heavy debts along with mortgage borrowers looking to refinance and first-time buyers looking to get on the property ladder can now look forward to brighter days ahead.”