Key decision expected today 'almost certain' to be good news for home buyers

Borrowing costs are expected to ease further as the Bank of England prepares to slash interest rates for the fifth time in a year on Thursday, according to experts. The Bank's Monetary Policy Committee (MPC) is widely anticipated to trim the base rate by 0.25 percentage points to 4%.

This would represent the fifth cut since August last year, when rates began their steady descent from a peak of 5.25%. The move could provide relief for mortgage holders and prospective homebuyers, with hopes that more affordable deals will emerge if the Bank's base rate drops further.

Economists believe a cooling UK jobs market and sluggish economic growth may prompt the MPC to relax monetary policy. Official figures from the Office for National Statistics (ONS) revealed the UK unemployment rate climbed to 4.7% in the three months to May – the highest level in four years.

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Meanwhile, average earnings growth, excluding bonuses, decelerated to 5% in the period to May, hitting its lowest point for nearly three years. Bank of England Governor Andrew Bailey indicated earlier this month that the Bank would be ready to reduce rates if the jobs market displayed signs of deterioration.

Additionally, ONS data demonstrated the UK economy shrank in both April and May, further pressuring policymakers to reduce borrowing costs.

Matt Swannell, chief economic adviser to the EY Item Club, described a 0.25 percentage point reduction on Thursday as "almost certain" given the "sluggish" economy. Recent survey data, closely monitored by economists, suggests that firms are struggling with higher labour costs and wider geopolitical uncertainty impacting investment plans, he said.

"With the MPC balancing signs of fragility in the labour market against evidence of lingering inflationary pressure, the committee will likely signal that further gradual interest rate cuts remain appropriate," Mr Swannell predicted.

Sanjay Raja, senior economist for Deutsche Bank, stated that the economy has been "weaker than the MPC anticipated" since it last published a Monetary Policy Report in May. The unemployment rate is slightly higher, wage growth has weakened, and redundancies have increased, he said.

However, he suggested the MPC will be "between a rock and a hard place", likely leading to a split vote within the nine-person committee. He predicts two members voting to keep the level at 4.25%, and another two opting for a larger 0.5 percentage point cut.

Other economists mentioned they will be watching out for any comments from the Bank about the future path for interest rate cuts, which is more uncertain given the balance of risks to the economy.

Some policymakers may be more concerned by recent inflation data, with prices rising at the fastest rate in 15 months in June. Rising food inflation has put pressure on the overall rate in recent months.