Bank of England Chief Economist Huw Pill said labour market data released earlier on Tuesday showed inflation pressures in Britain remained too high for the BoE's 2% inflation target.

U.K. wages rose at a slower pace in September, opening the way for further rate cuts from the Bank of England.

The central bank said future cuts would be gradual amid higher inflation forecasts after the new government introduced spending and tax increases in its budget.

Santander, HSBC and TSB raised rates by up to 0.3 percentage points. The moves come as mortgage lenders have had a rush in custom, according to brokers. They have upped their rates to ease demand even after the Bank of England last week cut borrowing costs by 0.25 percentage points.

The Bank of England has cut its main interest rate by a quarter of a percentage point after inflation across the U.K. fell below its target rate of 2%.

The markets and economists expect the Bank of England will cut its bank rate by 25 basis point to 4.75% on Thursday. It will be the second such reduction in borrowing costs since the U.K. central bank began easing policy in August.

Interest rates have been cut for the second time this year, by a quarter of a percentage poi, but mortgage rates are still set to rise in a blow to homeowners. The Bank of England reduced the base rate from 5 per cent to 4.75 per cent on Thursday, following a 0.25 percentage-point cut in August, which was the first drop in four years.

The outcome of the Monetary Policy Committee meeting was announced at midday today. Stay up to date with live reporting and analysis from the team at MoneyWeek.

Bank of England policymaker pledges to ‘move big’ when ready to cut rates - Catherine Mann, an economist and member of the Bank’s Monetary Policy Committee, has not yet opted to reduce rates.