Will the Bank of England cut interest rates after UK inflation is held at 2 percent?

UK inflation has remained steady at 2 percent in June, the Office for National Statistics (ONS) has said. The rate of inflation in the Consumer Prices Index (CPI) remained unchanged as price rises across the country stayed at the Bank of England’s target level for the second month running.

This means that although prices are still rising, they are doing so at a rate that the central bank is comfortable with, after nearly three years of above-target inflation fuelling the cost-of-living crisis.

Experts are now saying that interest rates should be cut in order to stop squeezing the living standards of British households, a Bank of England rate-setter has said. The Bank's base rate - which is used to help set mortgage rates and other borrowing costs - is currently at a 16-year-high of 5.25 percent after they were increased in a bid to tackle soaring inflation.

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The MPC, which votes to set the rate, has held interest rates at this level for the past seven meetings but some economists have predicted they will cut the rate at the next vote on August 1.

Swati Dhingra, a member of the Bank’s nine-strong Monetary Policy Committee (MPC), said “now is the time” for a reduction in the bank rate. Ms Dhingra, who was one of two rate-setters to vote for a cut last month, told The Rest Is Money podcast that demand in the economy is soft enough to begin cutting rates.

“I don’t see some kind of consumption boom, and if we are going to start moderating from the very high level of interest rate where we are at now – 5.25% – it is going to take some time for that to happen,” she said.

“What we’ve already seen is that consumer price