Interest rates – live: Bank of England set to raise rates as ‘shallow’ recession looms

But some experts think the Bank is heading towards the end of its cycle of rate hikes, bringing some potential relief to strained borrowers.

Markets expect the Bank’s monetary policy committee (MPC) to raise interest rates to 4 per cent on Thursday, from the current rate of 3.5 per cent.

The UK is not alone in raising interest rates in a bid to tame sky-high inflation.

Policymakers across the pond have also been hiking rates and the Federal Reserve yesterday announced a further quarter point rise.

The Fed’s latest hike brings that Federal funds rate to a range of 4.50 per cent to 4.75 per cent.

Cora Lewis takes a look at what the Fed hike means for Americans.

The profits of energy companies have been coming under close scrutiny of late as they continue to make huge profits due to increased demand coming out of the Covid pandemic and Vladimir Putin’s illegal war in Ukraine, which drove up the price of oil and gas.

The government introduced a windfall tax on oil and gas giants to help people pay their energy bills, although some companies have got away with paying little or nothing due what the Labour Party described as a “loophole” in the legislation.

In October last year, the BBC reported that Shell had paid zero in the windfall tax. The firm said it only expected to start paying the levy this year.

Today, Shell has posted the biggest profits in its history. Profits increased by 53 per cent to 84.3 billion dollars (£68.1 billion) in 2022.

Shell chief executive Wael Sawan said: “Our results in Q4 and across the full year demonstrate the strength of Shell’s differentiated portfolio, as well as our capacity to deliver vital energy to our customers in a volatile world.

“We believe that Shell is well positioned to be the trusted partner through the energy transition.

“As we continue to put our Powering Progress strategy into action, we will build on our core strengths, further simplify the organisation and focus on performance.

“We intend to remain disciplined while delivering compelling shareholder returns, as demonstrated by the 15 per cent dividend increase and the four-billion-dollar share buyback programme announced today.”

My colleague Sam Rkaina has the story:

The FTSE 100 closed down again on Wednesday as it continued a recent retreat from its four-year highs in mid-January.

The index fell by 10.59 points, ending the day at 7,761.11, a drop of a little over 0.1% which was influenced by pharma giant AstraZeneca and some of the biggest mining companies in the world.

The falls came as traders look towards interest rates decisions from the US Federal Reserve, and the Bank of England, which reports at midday on Thursday.

Yesterday Nationwide, one of the country’s biggest mortgage lenders, said that average UK house prices had slumped for the fifth month in a row in January, down to 0.6 per cent.

The UK’s housing market has been cooling in recent months following record growth during the Covid pandemic.

Prices have been falling due to a combination of inflation, the general cost of living squeeze and rising interest rates.

When the Bank first started raising rates last autumn in the aftermath of Liz Truss’s mini-Budget, mortgage lenders began hiking their prices, making it more expensive to buy a house, which dampened down demand in the market.

And although mortgage rates are starting to come down they remain well above where they were last year. Few lenders are offering deals below 4 per cent – many had previously been offering customers in the region of 2 per cent.

Meanwhile, some mortgage holders whose deals are linked to the Bank’s base have also seen their costs increase – in some cases – by hundreds of pounds.

Analysts believe that the Bank’s policymakers could be split on their decision on interest rates today.

The Monetary Policy Committee (MPC) has nine members – the Bank governor, the three deputy governors for monetary policy, financial stability and markets and banking, the chief economist and four external members appointed directly by the chancellor.

Committee members vote on whether they think the base rate should rise – and by how much. But they do not always agree.

Experts say some members of MPC could opt for a smaller hike to 3.75 per cent, or no increase at all.

A decision is made based on a majority of votes.

But the tide could be set to turn imminently, with some economists suggesting the decision will mark the penultimate base rate rise.

Interest rates could peak at 4.5 per cent or 4.25 per cent next month, before coming back down.

UK markets slipped into the red on Tuesday after a stark report from the International Monetary Fund (IMF) warned that Britain will be the only major economy to plunge into recession this year.

The grim forecast from the group predicted that the UK will lag behind its counterparts in the G7 group of advanced nations, with even sanction-hit Russia expected to grow this year.

London’s leading indices all suffered losses on Tuesday with the gloomy outlook hitting investor sentiment.

The present spike means that the price of everyday items like staple foods, fuel, clothing, shoes and furniture have all climbed over the last year, a development that threatens to hit low-income families hardest at a time when they can least afford it.

Britain’s consumer economy is still awaiting the “latent spending power” built up during the pandemic, writes James Moore.

The deadline for submitting tax returns is fast approaching.

While those sending their returns to HMRC on paper have been able to relax since Halloween night, the bulk of digital filers are doomed to spend the days before 31 January with a cloud of calculations hanging over their heads.

Punishments for those who put it off too long can be crushing. Even those who need to file returns but have no tax to pay must submit theirs in time or face an initial £100 fine.

Liam James covers the unfortunate mistakes taxpayers can easily make: