Latest news with #AndrewBailey
Daily Mail
2 hours ago
- Business
- Daily Mail
Bank of England boss Andrew Bailey sounds alarm over jobs as it leaves interest rates on hold
Bank of England Governor Andrew Bailey yesterday sounded the alarm over the darkening outlook for jobs as it left interest rates on hold – but opened the door to a cut in August. He said there had been 'signs of softening in the labour market' as a Bank survey found that UK employers are slamming the brakes on pay rises as a result of Rachel Reeves' £25billion raid on employers' National Insurance. Global events are also 'highly unpredictable' as conflict in the Middle East pushes up oil prices and US tariffs also take their toll. The comments are the latest evidence undermining Government claims that it is turning the economy around. Recent figures showed more than 100,000 UK jobs were lost in May with a quarter of a million axed since the Budget. Growth in the first quarter of this year was followed by a downturn in April, when GDP slumped 0.3 per cent. Employment growth is also 'near zero'. The Bank's monetary policy committee left interest rates at 4.25 per cent, citing the need for a 'gradual and careful' approach. But three of the nine members voted for a cut, fuelling hopes of a rate slash in August. Inflation is 3.4 per cent and expected to climb close to 4 per cent by the end of the year. The feedback from the Bank's survey was bleak. Many firms are in 'wait-and-see' mode on tariffs while investment intentions are being held back by factors such as 'fragile demand, trade developments, Government tax and labour policies'.
South Wales Guardian
3 hours ago
- Business
- South Wales Guardian
UK interest rates kept on hold with Bank alert to ‘highly unpredictable' world
The Bank's Monetary Policy Committee (MPC) decided to keep rates unchanged at 4.25%. In a split vote, with six members opting to hold and three preferring to cut, the MPC said a 'gradual and careful approach' to reducing borrowing costs continued to be the right course of action. Bank governor Andrew Bailey said: 'Interest rates remain on a gradual downward path, although we've left them on hold today. 'The world is highly unpredictable.' He added that there were 'signs of softening in the labour market' – referring to indicators including slower hiring and wage growth easing – which were being closely watched to see how far they feed into UK inflation. The committee said it was alert to concerns about conflict in the Middle East, which has escalated in recent days with attacks between Israel and Iran. In the minutes of the MPC's meeting, it noted that there had been 'rapid geopolitical developments', adding: 'Energy prices had risen owing to an escalation of the conflict in the Middle East. 'The committee would remain vigilant about these developments and their potential impact on the UK economy.' It echoes similar remarks made by the US's central bank which also opted to keep interest rates on hold on Wednesday. Global oil and natural gas prices have surged in recent weeks, which threatens to push up energy costs in the UK. Furthermore, the MPC noted that Donald Trump's tariff policy was posing risks to global trade and continuing to create uncertainty. But it said that deals struck between the US and other countries, including the UK, meant that the direct impact of the 'trade shock' on global growth could be smaller than it had forecast last month. Meanwhile, the decision to keep rates on hold came as UK Consumer Price Index (CPI) inflation remained above the Bank's 2% target level, coming in at 3.4% last month. The jobs market was also starting to cool, with the rate of unemployment ticking up and pay growth starting to ease. The Bank said its network of agents had found that cost pressures from the beginning of April – including national insurance contributions rising – had put pressure on firms to recover them by raising prices. As well as price hikes, it noted that businesses had been leaning on other actions to mitigate costs, including reducing their workforce, staff hours, salaries, and absorbing into profits. The Monetary Policy Committee voted by a majority of 6-3 to keep interest rates at 4.25% Find out more: — Bank of England (@bankofengland) June 19, 2025 It also pointed to waning business sentiment amid weak growth in the UK economy, with demand not expected to recover until 2026. Signs of a weakening jobs market and economic growth indicates that a rate cut could be on the table when the committee next meets in August. Matt Swannell, chief economic adviser to the EY Item Club, said three MPC members voting for a cut was 'probably a sign that the MPC has become slightly more concerned about the labour market than it was in May'. 'This only raises the bar for the MPC to break from its cut-hold tempo at its August meeting and opens the door slightly to rate cuts potentially speeding up in the latter half of this year,' he said. Other experts pointed out that the Bank was having to weigh up a cooling labour market with growing pressures on inflation stemming from global developments. James Smith, developed market economist for ING, said some policymakers had a 'beady eye' on oil prices and were 'wary of a repeat of 2022, where a rise in energy prices turned into a much wider and more persistent services-driven inflation episode'. He is nonetheless forecasting a reduction in rates in August and again in November. Rachel Reeves said the Government respected the Bank's decision as she spoke at The Times CEO Summit. Speaking in central London, the Chancellor said: 'We respect independent economic institutions, and the Bank has got an incredibly important but difficult job to do. 'We want them to set the monetary policy that is appropriate for meeting the inflation target, because we also saw in the last parliament a double-digit inflation which was so challenging for businesses, but also family finances, which also has a knock on impact on business.' Ms Reeves, a former economist at the Bank, insisted the four interest rates cuts made under Labour were 'a world away from the previous parliament, when interest rates went up so sharply because of the poor economic mismanagement of prime ministers and chancellors'.
Daily Tribune
5 hours ago
- Business
- Daily Tribune
Bank of England freezes rate as inflation stays high
The Bank of England kept its key interest rate at 4.25 percent on Thursday as UK inflation remains elevated and risks climb owing to US tariffs and the Israel-Iran conflict. The central bank's decision, widely expected by analysts, came one day after the US Federal Reserve maintained its benchmark borrowing costs unchanged, citing concerns over high inflation and slowing growth in the world's biggest economy. Bank of England (BoE) governor Andrew Bailey hinted at cuts later this year, however, as the UK economy experiences sluggish growth. "Interest rates remain on a gradual downward path, although we've left them on hold today," Bailey said, adding that "the world is highly unpredictable". Official data Wednesday showed UK annual inflation dipped less than expected in May, to 3.4 percent, which leaves it well above the BoE's two-percent target. In a statement, the central bank noted a recent surge in energy prices owing to "escalation of the conflict in the Middle East". Nevertheless, analysts expect the BoE to reduce the rate at its next monetary policy meeting. "The Bank of England opens the door for a cut in August as it keeps one eye on energy prices," said Yael Selfin, chief economist at KPMG UK. The Bank of Japan also kept interest rates unchanged this week. But earlier Thursday, Norway's central bank made a surprise cut and the Swiss National Bank trimmed rates to zero percent, with both highlighting an uncertain economic outlook. The BoE last month cut borrowing costs by a quarter point as tariffs began showing signs of weighing on growth. Britain's economy shrank more than expected in April, owing also to a tax hike on UK businesses.
Yahoo
5 hours ago
- Business
- Yahoo
BoE leaves interest rates on hold at 4.25%
The Bank of England has left interest rates on hold at 4.25%. The Bank's Monetary Policy Committee (MPC) chaired by Bank Governor Andrew Bailey voted by 6 to 3 to leave the cost of borrowing unchanged in a blow to heavily indebted businesses and millions of mortgage borrowers. Three members of the MPC voted to cut rates to 4%. Rates were last cut to their current level in May. Today's decision had been widely expected in the City, particularly after it was revealed yesterday that the rate of inflation only fell slightly to 3.4% in May. However most analysts expect the Bank to make its next move in August with a further quarter point cut to 4% to help boost the UK's anaemic economic growth. That would be the fifth reduction since the Bank started easing interest rates from their peak of 5.25% in July last year. A further reduction to 3.75% is widely expected in November Rates were hiked rapidly by the Bank from December 2021 to August 2023 to get a grip of the rampant inflation unleashed by the ending of Covid restrictions and the energy price spike that followed the full scale Russian invasion of Ukraine. It left millions of homeowners who took out fixed two and five mortgage deals at record low interest rates between 2017 and 2021 facing hugely higher costs when they had to remortgage. Around 1.6 million mortgage deals are set to expire this year, according to trade body UK Finance. Suren Thiru, economics director at accounting body ICAEW , said: 'Keeping interest rates unchanged is a big blow to those people wrestling with high mortgage bills and firms struggling with April's host of major bill rises and tax hikes. 'Though this policy loosening cycle is not yet over, this latest decision is further confirmation that the speed of interest rate cuts remains especially cautious, with policymakers wary over elevated inflation and intensifying international instability. 'While just three MPC members voted to cut rates, an August policy loosening remains probable with the meeting minutes indicating continued concerns over the UK's vulnerability to growing economic and geopolitical headwinds. 'With policymakers facing a difficult combination of deepening global turbulence, uncomfortably high inflation and rising oil prices, future interest rate decisions will be more fraught, particularly if the economy weakens further.' Mark Harris, chief executive of mortgage broker SPF Private Clients, said: 'With only a two-way split in voting this time around - three members voted for a quarter-point reduction while six voted for a hold - this is encouraging, suggesting that another reduction could come at the August meeting. 'However, with the Bank opting for a cautious approach, it has missed a real opportunity to be bold by cutting rates again. This would have sent out a strong message, helping boost the housing market and wider economy, particularly now that the stamp duty concession is no longer available. Paul Noble, CEO of online lender Chetwood Bank, said: 'The MPC's lack of action piles on greater uncertainty for mortgages as well, leaving would-be buyers in the lurch. 'This cautious approach could lead to greater paralysis when what markets need is a catalyst. For savers, the risk is time – it's vital to find to best returns, to stay flexible, and to stop letting handwringing on Threadneedle Street dictate their outcome.' Error in retrieving data Sign in to access your portfolio Error in retrieving data
Associated Press
6 hours ago
- Business
- Associated Press
Bank of England says world is ‘highly unpredictable' as it keeps interest rate at 2-year low
LONDON (AP) — The Bank of England warned Thursday about the 'highly unpredictable' geopolitical environment as it kept its main interest rate unchanged at the two-year low of 4.25%. With concerns mounting over the conflict between Israel and Iran, and uncertainty over U.S. President Donald Trump's tariff agenda, rate-setters at the bank were widely expected to keep borrowing costs on hold as they await developments. However, the news that three of the nine policymakers on the Monetary Policy Committee voted to cut rates by a quarter of a percentage point has swelled market expectations that rates will be cut again in August. Minutes to the meeting showed that policymakers were mindful of how the conflict in the Middle East will impact on oil prices, which have risen sharply in recent days to over $75 a barrel. The prevailing view at the bank was that inflation, which currently stands at 3.4%, would remain high over the coming months but start to head back towards next year especially as unemployment has started to rise, a development that can keep a lid on wage demands and hence lower inflation. The uptick in oil prices has the potential to offset that. 'Interest rates remain on a gradual downward path, although we've left them on hold today,' bank governor Andrew Bailey said. 'The world is highly unpredictable.' Since its first quarter-point rate cut last August from the 16-year high of 5.25%, the Bank of England has played it steady, reducing interest rates every three months. That would mean the next reduction is in August. Economists believe that remains the most likely outcome but cautioned that geopolitical events could prompt a reassessment. 'Further escalation of the conflict in the Middle East could push up on U.K. inflation, which could see the Bank move more cautiously,' said Felix Feather, an economist at asset management firm Aberdeen. The cuts have come even though inflation has been above the bank's target rate of 2% for most of that time. Rate-setters can't do much about current inflation so set policy on a longer-term horizon, such as over two years. Uncertainty over the level of tariffs U.S. President Donald Trump will impose around the world is also clouding the outlook for prices around the world. Though the U.K. looks like it will be spared a raft of tariffs, the backdrop for the global economy remains highly uncertain. The tariff issue is at the forefront of concerns at the U.S. Federal Reserve, which on Wednesday kept its key rate unchanged, to the chagrin of Trump, who has been urging the central bank to join others, such as the Bank of England and European Central Bank, and cut borrowing costs.
