The oil shock has complicated what was a reasonably predictable MPC vote, that's according to AJ Bell's Danni Hewson, who points to LSEG data showing roughly a 17% chance of a hike on Thursday as Brent trades near $108 a barrel.
She points to the jump in pump prices contributing to headline CPI of 3.3% in March, a government warning that higher prices could linger for roughly eight months after the Middle East conflict ends, memories of the 2021 cost‑of‑living crisis and still‑fragile growth alongside high borrowing costs as factors that constrain the Bank’s room for manoeuvre.
Sarah Coles, AJ Bell’s head of personal finance, meanwhile, beleives gilt yields and swap rates are driving volatility in mortgages and savings, March’s war shock pushed yields and fixed deals up, a partial easing in early April reversed and fierce competition roughly the final year of the £20,000 Cash ISA allowance has kept savings rates attractive, so she advises those wanting to fix savings or facing remortgages in the next six months to consider acting now.
"How many members feel it would be sensible to begin raising interest rates in a bid to prevent inflation becoming entwined in the UK’s economic fabric once again will affect market, business and consumer sentiment," Hewson said, and highlighted that the Bank of England meeting on Thursday will be the immediate test.
