The bank is also considering other measuresexternalsuch as “core inflation” when deciding whether or not to change the rate or how to change it.
Core inflation tends to be highly volatile and does not include food or energy prices, which will give us a better indication of the long-term trend.
This was 3.7% in January, up from 3.2% in December 2024.
After the October budget, the bank predicted that policies included, including an increase in national insurance contributions paid by employers, would slightly increase inflation as businesses pass increased costs at higher prices.
In February, Gov. Andrew Bailey warned that banks’ approach to future cuts would be “gradual and cautious” due to increased economic uncertainty.
Banks expect inflation to skyrocket to 3.7% between July and September 2025 due to rising energy prices, water rates and bus fares.
We then believe inflation will return towards the end of 2027, as we expected this to happen earlier this year.
The next interest rate will be announced on Thursday, March 20th.
Next Wednesday, March 26th, Prime Minister Rachel Reeves plans for the UK economy.
