Latest news with #Investec
Yahoo
a day ago
- Business
- Yahoo
Bank of England holds interest rates amid intensifying inflation risks
As widely anticipated, the Bank of England (BoE) decided to keep its benchmark rate at a 2-year low of 4.25% on Thursday. This comes as fears grow that the conflict between Israel and Iran will escalate and that US tariffs will further fuel inflation. Six out of the nine-member panel of the monetary policy committee voted to hold, while three of them saw fit to cut. The bank lowered its rate to 4.25% in May, the fourth cut after an aggressive tightening period in 2022-2023. More cuts are still expected in the coming months by the market. The central bank's benchmark interest rate determines how banks change their rates on savings and loans. UK inflation, the primary figure driving the monetary policy committee's decisions, came in at 3.4% on Wednesday, far above the BoE's 2% target. Price increases, however, slowed slightly compared to the annual price change measured in April, which stood at 3.5%. The prevailing view at the bank was that inflation would remain elevated over the coming months but start to slow towards next year. But an uptick in oil prices, due to the current geopolitical crisis between Israel and Iran, could change this, as energy prices translate into the costs of producing and transporting all other goods. 'The risk to energy prices has clearly intensified and moved up the agenda given developments in the Middle East,' Sandra Horsfield, an economist for Investec, told AP. Uncertainty over the level of tariffs US President Donald Trump will impose around the world is also clouding the outlook for prices across the globe. 'We are still awaiting the full impact of Donald Trump's tariffs to show up in the prices of goods. We are approaching the end of the 90-day pause on reciprocal tariffs, and what happens from there is really anyone's guess,' Lindsay James, investment strategist at Quilter said. She added that even with the US-UK trade deal, the raft of tariffs on other nations would likely be felt in some form in the UK too. This will especially be the case if the UK's biggest trading partner Europe leaves the table with no agreement. While setting their focus on inflationary risks, the BoE also need to consider that growth in the UK economy is slow and could benefit from lower interest rates. In April, economic output sank by 0.3%, due to falling exports to the US and higher costs for businesses, including a tax raise. "The expectation is the UK economy will stagnate again in the second half, making the need for rate cuts more prominent," James said. "But with risks on the global stage not only uncertain but also substantial, the mantra of rates being 'higher for longer' will continue.'
Euronews
a day ago
- Business
- Euronews
Bank of England holds interest rates amid intensifying inflation risks
As widely anticipated, the Bank of England (BoE) decided to keep its benchmark rate at a 2-year low of 4.25% on Thursday. This comes as fears grow that the conflict between Israel and Iran will escalate and that US tariffs will further fuel inflation. Six out of the nine-member panel of the monetary policy committee voted to hold, while three of them saw fit to cut. The bank lowered its rate to 4.25% in May, the fourth cut after an aggressive tightening period in 2022-2023. More cuts are still expected in the coming months by the market. The central bank's benchmark interest rate determines how banks change their rates on savings and loans. UK inflation, the primary figure driving the monetary policy committee's decisions, came in at 3.4% on Wednesday, far above the BoE's 2% target. Price increases, however, slowed slightly compared to the annual price change measured in April, which stood at 3.5%. The prevailing view at the bank was that inflation would remain elevated over the coming months but start to slow towards next year. But an uptick in oil prices, due to the current geopolitical crisis between Israel and Iran, could change this, as energy prices translate into the costs of producing and transporting all other goods. 'The risk to energy prices has clearly intensified and moved up the agenda given developments in the Middle East,' Sandra Horsfield, an economist for Investec, told AP. Uncertainty over the level of tariffs US President Donald Trump will impose around the world is also clouding the outlook for prices across the globe. 'We are still awaiting the full impact of Donald Trump's tariffs to show up in the prices of goods. We are approaching the end of the 90-day pause on reciprocal tariffs, and what happens from there is really anyone's guess,' Lindsay James, investment strategist at Quilter said. She added that even with the US-UK trade deal, the raft of tariffs on other nations would likely be felt in some form in the UK too. This will especially be the case if the UK's biggest trading partner Europe leaves the table with no agreement. While setting their focus on inflationary risks, the BoE also need to consider that growth in the UK economy is slow and could benefit from lower interest rates. In April, economic output sank by 0.3%, due to falling exports to the US and higher costs for businesses, including a tax raise. "The expectation is the UK economy will stagnate again in the second half, making the need for rate cuts more prominent," James said. "But with risks on the global stage not only uncertain but also substantial, the mantra of rates being 'higher for longer' will continue.' Switzerland's central bank (SNB) decided to lower its key interest rate to zero on Thursday as inflationary pressures have eased. The Swiss National Bank says its policy rate would drop to zero from 0.25%, after noting that nearly flat inflation nosed into negative territory in May. Consumer prices fell by an annual 0.1% in May. Many Western economic powers have been grappling with monetary policy at a time when price rises have eased in many places, but political instability and US tariffs are muddying economic predictions. The SNB attributed the drop in inflation in Switzerland primarily to declining prices in the tourism and oil sectors. It's now projecting annual inflation at 0.2% this year, before edging up to a half-point next year and 0.7% in 2027. That's based on a scenario that its target interest rate will remain at zero over that span. "In its baseline scenario, the SNB anticipates that growth in the global economy will weaken over the coming quarters," it said in a statement. "Inflation in the US is likely to rise over the coming quarters. In Europe, by contrast, a further decrease in inflationary pressure is to be expected." Switzerland enjoyed "strong" economic growth in the first quarter, the bank said, largely because exports to the United States were brought forward as companies sought to anticipate future US tariffs that could raise the price of foreign goods for American consumers. The US Federal Reserve kept its key rate unchanged Wednesday as it waits for additional information on how tariffs and other potential disruptions will affect the economy this year. US President Donald Trump has pressed the Fed to lower interest rates, hoping it will boost the US economy.
Time of India
a day ago
- Business
- Time of India
UK interest rates: Bank of England likely to keep rates unchanged; cautious stance amid Middle East tensions
The Bank of England is expected to keep interest rates unchanged on Thursday amid growing fears that the ongoing Israel-Iran conflict might drag in the US, pushing oil prices higher and worsening inflation in the UK. The bank's nine-member Monetary Policy Committee is predicted to hold the main rate at 4.25%, a two-year low, while it watches how the situation in the Middle East turns over the upcoming days. With UK inflation running at 3.4%, well above the Bank of England's 2% target, policymakers are expected to keep a close watch on oil prices, which have surged past $75 a barrel in recent days. "The risk to energy prices has clearly intensified and moved up the agenda given developments in the Middle East," said Sandra Horsfield, economist at Investec told AP. Policymakers had earlier expected inflation to stay elevated for a few more months before easing next year, but the recent oil prices surge could derail that forecast. Adding to the uncertainty are global trade tensions, particularly around potential tariffs from US President Donald Trump. While the UK may escape the worst of those tariffs, the wider global economic outlook remains uncertain. On Wednesday, US Federal Reserve had also kept rates unchanged, despite pressure from Trump to cut borrowing costs. Since August last year, the Bank of England has trimmed rates every three months from a peak of 5.25%, suggesting the next cut may come in August — if economic conditions allow. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
The Independent
2 days ago
- Business
- The Independent
Bank of England to make latest interest rate decision after inflation pressure
The Bank of England is widely predicted to keep UK interest rates at 4.25% during its Monetary Policy Committee meeting on Thursday. This decision is influenced by rising food inflation, which saw prices for food and non-alcoholic drinks increase by 4.4% in May, and the threat of surging oil prices. The overall Consumer Prices Index (CPI) rate reached 3.4% in May, slightly higher than economists' expectations, with chocolate prices notably soaring by nearly 18%. Economists from Niesr and Investec suggest that while services inflation has dropped, persistent wage growth, higher government spending, and Middle East tensions contribute to economic uncertainty. While rates are expected to be held this week, some analysts believe another rate cut could be considered at the subsequent MPC meeting in August.
Telegraph
2 days ago
- Business
- Telegraph
Live Bank of England poised to keep rates on hold amid inflation fears
The Bank of England is widely expected to keep interest rates on hold later today amid global uncertainty and surging food and oil prices. Most economists think the majority of the members of the Monetary Policy Committee (MPC), which sets borrowing costs, will vote to keep the Bank Rate at 4.25pc. The MPC has voted to cut rates at every other meeting since it started easing borrowing costs last August, from a peak of 5.25pc. However, official figures on Wednesday showed inflation remained persistent at 3.4pc in May, which is well above the Bank of England's 2pc target. Food prices surged during the month at the fastest pace since February last year, the data showed, just as the conflict in the Middle East triggered a spike in the price of oil. Meanwhile, policymakers must also consider the potential hit to global growth from Donald Trump's tariff regime and the risks it poses to inflation. Monica George Michail, associate economist for the National Institute of Economic and Social Research (Niesr) said the institute was forecasting inflation to remain above 3pc for the rest of the year amid 'persistent wage growth and the inflationary effects from higher Government spending'. 'Additionally, the current tensions in the Middle East are causing greater economic uncertainty,' she said. 'We therefore expect the Bank of England to keep rates on hold this Thursday and implement just one further cut this year'. Sandra Horsfield, an economist for Investec, added: 'The risk to energy prices has clearly intensified and moved up the agenda given developments in the Middle East. 'It seems unlikely the MPC will want to change policy rates this week.'
