Interest rates – live: What is the Bank of England expected to do, will low rates ever return and what time is the announcement?

House prices rose by 0.9 per cent on average month-on-month in October – likely reflecting a constrained supply of properties for buyers to choose from – according to an index released on Wednesday.

Across the UK, property values fell by 3.3 per cent compared with October last year, Nationwide said. The average UK house price in October was £259,423.

Robert Gardner, Nationwide‘s chief economist, said that despite the month-on-month rise in house prices: “Housing market activity has remained extremely weak, with just 43,300 mortgages approved for house purchase in September, around 30% below the monthly average prevailing in 2019.”

He continued: “The uptick in house prices in October most likely reflects the fact that the supply of properties on the market is constrained.

“There is little sign of forced selling, which would exert downward pressure on prices, as labour market conditions are solid and mortgage arrears are at historically low levels.

“Activity and house prices are likely to remain subdued in the coming quarters.”

He said that with the Bank of England base rate not expected to decline significantly in the years ahead, “borrowing costs are unlikely to return to the historic lows seen in the aftermath of the pandemic.”

Althea Spinozzi, senior fixed income strategist at investment platform Saxo, has suggested Rishi Sunak’s unpopularity could influence today’s decision.

She said the government’s fiscal policies “remain uncertain as Rishi Sunak is losing popularity, adding to inflation upside risk” – suggesting that a desperate PM may be tempted to cut taxes win votes.

“Within this environment, the BoE is on the verge of losing its credibility. It tightened the economy too little, too slowly. There is no option for governor Andrew Bailey other than sticking to the higher-for-longer rhetoric, hoping to maintain a hawkish bias while it’s becoming more apparent that policymakers are afraid of breaking something.”

Unite has accused the Bank of England of squeezing workers living standards and have urged them to cut interest rates.

The Monetary Policy Committee (MPC), responsible for setting interest rates makes its decision today at midday.

Unite general secretary, Sharon Graham said: “The Bank of England has been squeezing the living standards of workers while the banks make billions from two years of rising interest rates – this has to stop. High inflation has not been driven by workers it’s been driven by the greed of the profiteers.

“The big four are just picking the pockets of workers to give handouts to shareholders. It’s high time the Bank of England took action against the real culprits of this cost of living crisis.”

Nick Brooks, Head of Economic and Investment Research at ICG, thinks the BoE is between a rock and a hard place as economic growth is slowing down, but inflation is still running high.

• The BoE is likely to keep its benchmark rate steady at 5.25% and emphasise that future policy remains data dependent.
• The dilemma the BoE faces is that although economic growth is slowing, the UK’s inflation rate is running at the highest among major developed economies and is proving very hard to bring down.
• Until there is a significant loosening of labour markets, the BoE will likely need to keep rates at current levels, with the risk that it is forced to tighten further in the coming months.

Changes in the Bank of England’s base rate, which is the interest rate at which high street banks borrow from Threadneedle Street, has a knock-on effect on the interest rates that the former then set their mortgage borrowers.

The changes will also affect anyone with savings and anyone who is borrowing money from banks.

An interest rate is a measure that tells you how high the cost of borrowing money is, or how high the rewards of saving are.

If you are borrowing money, typically from a bank, the interest rate on that money is the amount you will be charged for borrowing it.

It is a charge on top of the total amount of the loan and will be shown as a percentage of the overall.

Higher percentages mean paying more money to the lender for borrowing the money.

If you are saving money in a bank account, the interest rate on that money is the amount you will accrue on top of your savings. Banks will pay you a percentage of your total savings, typically at the end of the year.

Good morning and welcome to our Bank of England (BoE) live blog where we will be bringing you the latest updates and analysis on the interest rates announcement at 12pm.

Economists expect the BoE to keep rates at 5.25% due to concerns that the UK economy is heading towards a recession.

In September, the BoE kept rates unchanged at 5.25% – the first hold decision for nearly two years after 14 hikes in a row.