The Bank of England has held interest rates at 5.25 percent since August, eight months ago. It has done this in a bid to take the heat out of the economy, by driving up borrowing costs.

Interest hikes are a blunt instrument – the aim is to make people feel poorer and spend less – but they’re the only tool the BoE has.

The hikes have put massive pressure on millions of homeowners, who have been paying £500 a month more on average to service their mortgages.

They urgently need an interest rate cut, and in my view, the BoE should have acted in December or January.

The UK economy fell into recession in the second half of last year, destroying jobs, businesses and livelihoods.

Even a small cut of 0.25 percent would show the BoE gets it and will act when inflation pressures ease.

As they clearly are. Lest we forget, consumer price inflation (CPI) hit a thunderous 11.1 percent in October 2022. That’s more than three times higher than today.

The last time inflation was around today’s level was in September 2021, when it stood at 3.1 percent.

At that point, the BoE’s rate-setting monetary policy committee (MPC) was happy to hold base rates at 0.1 percent.

So why does it believe rates have to be more than 50 times higher today? It makes no sense.

Two MPC members have been voting to INCREASE rates, which I simply do not get at all. Felt like they have become completely detached from reality.

Talking about being detached from reality brings me to BoE governor Andrew Bailey. He’s attracted an awful lot of criticism, as people blame him for calling inflation wrong on the way up, and now on the way down, too.

A good deal of that criticism has come from me.

Yesterday, it sounded like the message was getting through. Bailey signalled that the BoE will cut rates in the coming months as he saw “strong evidence” that inflation was continuing to fall despite the resilience of the British jobs market.

I’ve given Bailey a hard time but he does have a major worry to deal with.

And that’s the US economy.

The US is booming, large thanks to President Joe Biden’s trillion-dollar green stimulus programme, bizarrely named the Inflation Reduction Act.

I say bizarrely because it’s having entirely the opposite effect, pumping up the US economy and inflation while the US Federal Reserve battles to cool it down.

Many suspect the Fed may not be able to cut interest rates at all this year, as a result.

READ MORE: ‘Utterly stupid’ BoE must cut interest rates now or 500,000 firms will collapse

I think the MPC should have the courage to break with the Fed and cut UK interest rates anyway. Our economy is much weaker and needs a break.

There’s a problem, though. If the MPC breaks lockstep with the US, the pound will fall.

That could have the unwelcome effect of making our imports more expensive and driving inflation back up.

Yet Bailey may have no choice.

The big inflation drop is likely to come next month, when April’s figure will reflect the huge 16 percent cut in Ofgem’s energy price cap.

Analysts reckon CPI could fall back to the BoE’s target of two percent. By May it could be as low as 1.7 percent.

If they’re right, the BoE will come under massive pressure to cut interest rates, regardless of what’s happening in the US. We may get that rate cut after all. Although not until June. Six months later than we should have done. Ah well, better late than never.

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