Bank of England keeps interest rate at 5.25%

Bank of England keeps interest rate at 5.25%

21 Mar 2024

Danny Vassiliades, Partner at XPS Pensions Group, commented: “The Bank of England has again held firm today in maintaining the base rate at 5.25%. This is despite yesterday’s announcement that CPI inflation fell to 3.4% over the year to February 2024, its lowest level since September 2021.

However, this welcome fall in inflation has once again raised market expectations that the Bank’s rates cuts are imminent. At XPS, we estimate that a 0.25% decrease in interest rates, outside of current market expectations, could increase aggregate UK scheme liabilities by c.£40bn. We therefore recommend that schemes should ensure they have suitably balanced investment strategies to protect against any adverse, unexpected market movements. Any future rate reductions would also be welcome news for debt holders, including the many pension scheme members with mortgages.”