“Swaps have gone up quite a bit, so we are thinking we’ll see quite a lot of rate movement over the coming weeks,” said Chris Sykes at broker Private Finance.
“Hopefully only 0.2-0.3pc, so still lower rates than November time.”
Households are already facing increased financial pressure with living standards at their most stagnant since records began.
Economists have warned that pay is rising too fast for the Bank of England to cut interest rates after wages rose by 6.2pc in the year to December.
Market indicators suggest the central bank will deliver three cuts to its Bank Rate – currently held at 5.25pc – towards the end of the year. The cuts, estimated at 0.25pc, will be followed by two or three further reductions in 2025, it is predicted.
“I think the Monetary Policy Committee will be watching the pay data very closely, particularly to see if the large rise in the national living wage has a material impact,” said Andrew Goodwin, chief UK economist at Oxford Economics.
“But they’ve made clear that pay growth just needs to be headed in the right direction for rate cuts – it doesn’t need to fall sharply. I’m confident that will be the case by June.”
The Bank of England will vote on its next rate decision on March 21.
