Bank of England postpones next week’s interest rate decision after Queen’s death

Decision makers, including Governor Andrew Bailey, had been expected to raise interest rates from 1.75% to 2.25%. (Yui Mok/PA) (PA Wire)

A widely expected rise in interest rates has been put on hold due to the death of the Queen, the Bank of England has said.

The Bank said that decision-makers on its Monetary Policy Committee would not meet as scheduled next week.

Instead the meeting, at which committee members were expected to hike rates again, will take place the following week, the Bank said

“In light of the period of national mourning now being observed in the United Kingdom, the September 2022 meeting of the Monetary Policy Committee has been postponed for a period of one week,” it said.

The new rates decision will instead be announced on 22 September.

It follows decisions by several public bodies to change their plans for the coming week.

The Office for National Statistics cancelled the publication of all data on Friday, while the Met Office has said it will only be posting daily forecasts and warnings during the 10-day mourning period.

The Bank had widely been expected to hike rates at the next meeting, the latest in a series of increases.

Analysts at Deutsche Bank had said that rates were likely to increase by 0.5 percentage points to 2.25 per cent – its highest since December 2008.

Others at BNP Paribas said that “there are arguably compelling reasons to up the ante” and raise rates to 2.5 per cent at the next meeting.

They said that while energy bills may have been capped, broader inflation still remains high for households and businesses alike.

“Although the first-order impact of ‘Trussonomics’ will be to lower inflation over the next 12 months, the sheer scale of stimulus is likely to add to inflation in the medium term, pointing to a higher terminal rate than the MPC had previously embedded,” BNP Paribas said.

The analysts added: “The MPC might feel a sense of political pressure too. While Truss and new chancellor Kwasi Kwarteng have re-affirmed the MPC’s independence, a review of its mandate – to which governor Andrew Bailey was open – looks likely sooner rather than later.

“To be clear, we do not think the MPC will be unduly influenced by politics, but with inflation so high to begin with, the optics of under-delivery are different against the current backdrop.”