The Bank of England is expected to keep interest rates at the same level in its next policy decision on Thursday.
The authorities will announce the outcome of their next meeting on December 19, where most analysts believe they will vote in favor of keeping the UK base interest rate at 4.75%.
The base rate influences how much banks charge for loans and mortgages, and has been kept high in recent years to curb runaway inflation.
Inflation fell back below the Bank’s 2% target earlier this year, prompting the Bank to cut rates in August and November.
But last month, official figures showed it rose again to 2.3% in October, its steepest rise in two years.
The spike in inflation was widely expected due to rising energy bills, but the rise was even sharper than most people had predicted.
It has dampened what little hope remained that authorities could vote for another rate cut this year.
Analyst Michael Hewson said the rise was “an uncomfortable reminder that UK inflation always tends to be tighter than many would like”.
The Bank is also likely to be cautious after Labor increased corporate taxes in its October budget.
Chancellor Rachel Reeves has increased the amount businesses must pay for National Insurance Contributions (NICs) in their expenditure statement.
The tax rises are designed to pay for more government spending on improving services such as public transport and the NHS, but some experts have warned they could be inflationary.
Andrew Bailey, governor of the Bank, said in early December that it is still unclear what effect the increase in NICs will have on the economy, but that it is the “biggest problem” after the Budget.
Bailey has consistently said in previous meetings that the Bank will take a tough approach to lowering interest rates.
Complicating matters for policymakers is that gross domestic product (GDP), the main measure of economic growth, fell slightly in October.
Higher interest rates tend to hamper GDP, meaning the contraction could make some of the Bank’s nine-member Monetary Policy Committee more inclined to vote for a rate cut in December.
But economists have said that October’s GDP contraction was because people took a wait-and-see approach ahead of budget policy decisions later that month, and that growth would pick up again.
Thomas Pugh, an economist at consultancy RSM, said the committee was unlikely to make any changes to its piecemeal approach.
“Ultimately, that means mortgage holders will not receive an early Christmas present from the Bank of England this year,” he said.
“We expect four cuts in 2025, meaning rates will end the year around 3.75%, but the risks lean toward fewer rate cuts.”