Bank of England expected to hold interest rates at 5.25%

1. What's the link between interest rates and inflation?

   

   Michael Race

   BBC Business Reporter

   The Bank of England has a target to keep inflation at 2% - but the current inflation rate, while lower than the peak of 11.1% seen in 2022, is still at 3.2%.

   The traditional response to rising inflation is to put up interest rates.

   The theory is that by making borrowing more expensive, people have less money to spend and in turn buy fewer things, reducing the demand for goods and leading to price rises to slow.

   But it’s a balancing act.

   High borrowing costs can also lead to businesses borrowing less, making them less likely to invest and create jobs. This can impact economic growth - which has been sluggish in the UK for some time.

   

   BBCCopyright: BBC

2. Our reporter at the Bank - before he was locked in

   

   Michael Race

   Reporting from the Bank of England

   

   BBCCopyright: BBC

   Good morning from the Bank of England in central London.

   I’m here to bring you the latest decision on interest rates, which are decided in this grand building behind me.

   I'm not sure when this will be published. But at 10am, I’ll be heading to the Bank’s basement down a long spiral staircase - it’s not quite Gringotts (for you Harry Potter fans), but I like to think it has that vibe.

   Along with other journalists, I’ll be locked in a room for two hours and handed a document revealing the Bank's interest rate decision and reasons behind it.

   We will also get the latest report on what the Bank thinks will happen to inflation and the UK economy in the coming months as well.

   So I’ll have two hours to digest the news - as well as some tea and biscuits - package it together, and explain what it all means shortly after midday.

3. Interest rates - more of the same?

   Welcome to our live coverage of the Bank of England’s latest interest rate decision, which is due at 12:00 BST.

   The Bank’s rate, which influences borrowing costs for things like mortgages and loans and also savings returns, stands at 5.25%, the highest level for 16 years.

   Economists expect the Bank will leave the rate unchanged - but stay with us for all the news and analysis.

   

   BBCCopyright: BBC