Holding rates means that interest rates are now set to fall steadily in 2024 to a possible 4.25 per cent this time next year
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The political impact of the Bank of England's decision to hold interest rates at 5.25 per cent is clear: a general election next Autumn now looks more nailed on than ever.
Senior Tory strategists have been telling me for months to expect a general election in October of November next year, despite hints that they might go earlier.
Certainly, the bigger than expected 2 per cent cut in National Insurance on January 6 fuelled rumours that Rishi Sunak was getting ready for an election in May, on the back of more personal tax cuts in the March Budget.
That would have gone down well with the activist base who prefer to 'door knock' on a warm summer's evening, rather than a cold winter one.
But this ignores the uncomfortable fact for the Tories that the party is 20 points behind the polls and as unpopular as when Boris Johnson was chucked out of office in mid-2022.
Instead, the party’s MPs knows that they have to avoid a general election for most of 2024 if only to try to wait for something - anything - to help the party start to tick up in the polls.
Chancellor Jeremy Hunt said before his Autumn statement that he wanted to win back the 20 per cent of voters who are undecided. That challenge remains.
That’s with the Bank’s decision to freeze rates is so important. A cut today would have meant that Sunak and his team might have bene tempted by an summer election, as voters felt better off.
But holding rates means that interest rates are now set to fall steadily in 2024 to a possible 4.25 per cent this time next year.
The hope is that by next October, Liz Truss's disastrous time in 10 Downing St will be a distant memory as interest rates have fallen to more affordable levels.
By then, too, the Government will have given as much time as possible to see if it can get flights taking off with illegally-arrived migrants to process in Rwanda.
That's why for me Tuesday's larger than expected 44 MP majority for Sunak's Rwanda plan was as much about shoring up support for the PM's embattled position in his party and the country, as the migrants issue.
Tory MPs knew that if they defeated the Bill at Second Reading, for the first time since 1986, and Labour forced an opportunistic vote of no confidence in the Government, Sunka would have been seriously destabilised.
The odds on an early election would have been cut by the bookies, with a poll in May, June or even February looking increasingly likely.
Conservative MPs can read the polls - and avoiding the risk of an early election, and a likely wipe out at the polls, was as important as hardening up the Rwanda plan. Afterall, even turkeys don't vote for Christmas.
