Latest news with #SwatiDhingra
Times
9 hours ago
- Business
- Times
Bank of England holds steady as divisions emerge over rates
The Bank of England missed the party on Thursday when it announced that interest rates would hold steady at 4.25 per cent. On a day littered with monetary policy announcements across Europe, it was the only major central bank to sit tight. Switzerland's central bank cut rates by a quarter point. Sweden's did the same, as did Norway's. In the UK, the monetary policy committee was not for turning and stuck to the script: markets expected rates to be held and the Bank of England duly delivered. However, that the committee voted 6-3 in favour of leaving rates unchanged did somewhat upset the apple cart. Analysts projected a 7-2 vote split. Dave Ramsden, a deputy governor, broke from the centre ground on the MPC and voted alongside Swati Dhingra and Alan Taylor — external committee members who have repeatedly voted for frequent and larger cuts — for a 0.25 percentage point reduction.
The Independent
12 hours ago
- Business
- The Independent
Stocks dip as Bank of England leaves interest rates unchanged
London's FTSE 100 closed lower on Thursday amid ongoing Middle East concerns, after the Bank of England left interest rates unchanged at 4.25%. The FTSE 100 index closed down 51.67 points, 0.6%, at 8,791.80. The FTSE 250 ended 216.27 points lower, 1.0%, at 21,073.99, and the AIM All-Share fell 5.17 points, 0.7%, at 758.19. The London Stock Exchange celebrated the 30th anniversary of AIM on Thursday, calling it a 'cornerstone' of the UK's capital markets. Since its launch in 1995, AIM has become one of the world's most successful growth markets, helping more than 4,000 companies raise over £136 billion. The decision to hold rates by the Bank's Monetary Policy Committee was widely expected, although the vote split was slightly more dovish than forecast. The MPC voted 6-3 for the status quo, with Swati Dhingra, Bank deputy governor Dave Ramsden and Alan Taylor preferring a 25 basis point rate cut to 4.00%. The Bank said there remain 'two-sided' risks to inflation meaning 'a gradual and careful approach to the further withdrawal of monetary policy restraint remains appropriate'. The Bank noted that higher food prices could raise 'inflation expectations, impacting wage and price-setting behaviours'. Bank of England governor Andrew Bailey said interest rates remain on a 'gradual downward path'. Ebury analyst Matthew Ryan said: 'The BoE still appears to be in no hurry to speed up the pace of policy loosening. Importantly for markets, the phrase that cuts will be both 'gradual and careful' was retained in the statement – there was some speculation that this could be either tweaked or jettisoned.' ING noted past experience has shown that the vote split contains few useful signals. 'December's meeting saw a similar 6-3 vote, yet heralded little change in the bank's overall stance,' ING said. It added that rate hawks will have an eye on oil prices. A 'serious spike in oil prices is the most obvious hawkish risk for the UK rate outlook', ING said. Nonetheless, ING expects the Bank to cut interest rates in August. The oil price rose again amid concerns the situation in the Middle East could worsen. Brent oil traded higher at 78.59 US dollars a barrel late on Thursday from 75.06 dollars on Wednesday as the Israel-Iran conflict continued. The oil price rise boosted oil majors and FTSE 100 heavyweights BP and Shell, which rose 1.4% and 1.1% respectively, but weighed on British Airways owner IAG, down 3.2% and low-cost airline easyJet, down 3.0%, on concerns of rising fuel costs and travel disruption. Israel's defence minister Israel Katz said Iran's Supreme Leader Ayatollah Ali Khamenei cannot 'continue to exist', days after reports that Washington vetoed Israeli plans to assassinate him, AFP reported. 'Khamenei openly declares that he wants Israel destroyed – he personally gives the order to fire on hospitals,' Mr Katz told journalists. 'Such a man can no longer be allowed to exist.' US President Donald Trump wrote on Tuesday that the US knew Mr Khamenei's location but would not kill him 'for now'. Uncertainty surrounds Mr Trump's next move amid reports that the US is ready to intervene in the conflict. Bloomberg on Thursday reported senior US officials are preparing for the possibility of a strike on Iran in coming days. In European equities on Thursday, the Cac 40 in Paris closed down 1.1%, as did the Dax 40 in Frankfurt. Financial markets in the US were closed to mark Juneteenth National Independence Day. The pound was quoted down at 1.3429 dollars at the time of the London equities close on Thursday, compared with 1.3472 dollars on Wednesday. On the FTSE 100, fears the Middle East conflict will lead to higher inflation and slower economic growth weighed on mining stocks. Anglo American fell 3.3%, Antofagasta declined 3.4% and Rio Tinto dipped 2.5%. Whitbread fell 1.6% after reporting total group sales fell by 3.8% to £710.9 million in the 13 weeks that ended May 29, the first quarter of its financial year, from £739.2 million a year earlier, or by 1% on a like-for-like basis. Total UK sales were down 5.4% to £648.2 million from £685.2 million. Accommodation sales fell 1.8% to £485.0 million from £494.1 million, while food and beverage revenue sales dropped 15% to £163.2 million from £191.0 million. UK revenue per available room fell 2.4% to £62 in the quarter from £63.54 a year ago. On the FTSE 250, Hays plunged 10% after saying it expects annual profit to be below market consensus, as the staffing firm grapples with challenging market conditions. AJ Bell's Russ Mould said the share price slump implies the jobs market is going from bad to worse. 'Companies are clearly worried about the economic outlook and they're reluctant to take on full-time staff, potentially not replacing anyone lost to natural turnover. At the same time, individuals are worried that if they move job they'll be in the 'last in, first out' firing line if companies look for new cost savings,' he added. Hays said permanent recruitment markets have been particularly damaged, amid 'low levels of client and candidate confidence'. Simon Lechipre, analyst at Jefferies, said the weaker than expected performance is particularly negative for Page Group where permanent recruitment makes up 72% of group fees. Shares in PageGroup fell 8.8% while Robert Walters dropped 4.8%. Hays expects annual pre-exceptional operating profit of £45 million, below company-compiled consensus of £56.4 million. The yield on the US 10-year Treasury was quoted at 4.39%, stretched from 4.36%. The yield on the US 30-year Treasury was quoted at 4.89%, widened from 4.86%. Gold was quoted lower at 3,368.94 dollars an ounce against 3,387.84 dollars. The biggest risers on the FTSE 100 were Melrose Industries, up 13.70p at 499.9p, BP, up 5.5p at 392.0p, Bunzl, up 28.0p at 2,250.0p, Shell, up 28.5p at 2,695.5p, and Vodafone, up 0.6p at 75.9p. The biggest fallers were Persimmon, down 50.0p at 1,317.0p, Antofagasta, down 60.0p at 1,699.0p, Anglo American, down 68.5p at 2,021.5p, IAG, down 10.2p at 309.3p, and Airtel Africa, down 5.4p, at 171.2p.
Yahoo
13 hours ago
- Business
- Yahoo
Bank of England holds interest rates at 4.25% amid inflation fears
The Bank of England (BoE) has kept interest rates untouched at 4.25% amid geopolitical uncertainty and surging food and oil prices. Members of the Monetary Policy Committee (MPC) voted by 6-3 to keep borrowing costs on hold following their reduction announced in May. Three members — Swati Dhingra, Dave Ramsden and Alan Taylor — backed a quarter of a point cut to 4%. Dhingra and Taylor had backed a half a point reduction at the meeting in May. It means the Bank has voted to cut rates at every other meeting since it started easing borrowing costs last August, from a peak of 5.25%. The governor of the Bank of England Andrew Bailey said the world had become 'highly unpredictable' as interest rates were held at 4.25%. Read more: UK inflation slows to 3.4% in May as transport costs ease Bailey said: 'Interest rates remain on a gradual downward path, although we've left them on hold today. 'The world is highly unpredictable. In the UK we are seeing signs of softening in the labour market. 'We will be looking carefully at the extent to which those signs feed through to consumer price inflation.' The decision had been widely anticipated by markets, particularly following inflation data for May showing prices rising 3.4% — well above the Bank's 2% target. Investors and economists saw little chance of a rate cut, especially with tensions in the Middle East escalating and pushing oil prices higher. Traders bet there is an 84% chance that policymakers will cut from 4.25% to 4% at the next meeting. The chances stood at 77% on Wednesday. This would remain in line with the Bank's pattern of reducing rates at every other meeting since it started lowering from a peak of 5.25% last August. Vivek Paul, UK chief investment strategist at BlackRock Investment Institute, said:'The Bank's decision to hold firm today shows that, much like the weather, inflation is too hot to feel comfortable about cutting rates just yet. Services inflation showed signs of easing in yesterday's CPI print, but remains stubbornly high. Read more: FTSE 100 LIVE: Stocks slip as Bank of England holds interest rates "Among developed market central banks, the Bank of England still faces one of the toughest trade-offs between growth and inflation. Uncertainty remains around tariff impacts, and the recent escalation of tensions in the Middle East has added fresh uncertainty." Indeed, the Monetary Policy Committee (MPC), led by governor Bailey, was expected to maintain a cautious tone even before the outbreak of conflict between Israel and Iran sent oil prices soaring by 8.5% in less than a week. Zara Nokes, global market analyst at JPMorgan Asset Management, said UK inflation is still 'uncomfortably high'. "Escalating tensions in the Middle East, and the upward pressure this is putting on oil prices, will only add to the Bank of England's concern about easing rates too quickly," she said. "The Monetary Policy Committee will face a tougher choice when meeting again in August, given the combination of still-sticky inflation and evidence that the labour market is quite clearly cooling. A deterioration in the labour market should, in theory, put downward pressure on inflation, but until there are clear signs of this in the hard data, the Bank should be careful not to claim victory over inflation quite yet, not least because of the uncertain geopolitical climate.' Threadneedle Street admitted that the Middle East conflict is pushing up energy prices. "Energy prices have risen owing to an escalation of the conflict in the Middle East. The Committee will remain sensitive to heightened unpredictability in the economic and geopolitical environment, and will continue to update its assessment of risks to the economy," it said. Brad Holland, director of investment strategy at Nutmeg, said: 'It was always going to be an uphill battle for the Bank of England to justify a back-to-back rate cut following last month's decision to bring down rates. Services inflation and wage growth continue to run hot, and external factors such as tariffs and global conflict have created too many 'unknowns'. The Bank is showing caution. 'For now, the question weighing on many people's minds is: how long will it take for interest rates to fall further? It is believed by many that the 'neutral rate', where the UK economy can deliver price stability, lies around 3%. But, we could be a long way away from this target with the market currently expecting the base rate to fall to 3.5% by April 2026. Getting services inflation down to a more manageable level is crucial to lowering interest rates. 'Many expect the next rate cut to take place in the early autumn when trends in services prices will be clearer, and the impact of the international situation will be better understood. Arguably, the Bank of England is playing for time.' Read more: Number of million-pound homes for sale in Britain doubles since 2019 The UK economy contracted 0.3% in April, marking the sharpest monthly decline since 2023. Analysts cited the lingering effects of US president Donald Trump's trade tariffs and a temporary hit from the expiration of the stamp duty holiday. Lindsay James, investment strategist at Quilter, said: 'Events of recent weeks means all hopes of the BoE moving faster to cut interest rates have been extinguished. As such, it comes as very little surprise that the MPC has chosen to hold rates at 4.25%. Although we had three votes for a cut, ultimately inflation continues to drive decision making, and with the headline figure remaining elevated earlier this week, there is very little movement just now for the committee, and that is before global events are factored in. '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. Even with the US-UK trade deal, the raft of tariffs on other nations would likely be felt in some form here too. In particular, Europe looks the least likely to cave to Trump, and given it is the UK's biggest trading partner, there will be knock-on effects." The BoE said that underlying UK GDP growth "appears to have remained weak", and the labour market has "continued to loosen". It also warned that there was a "two-sided risk to inflation", as weak demand could pull it down, but higher food prices could send it higher. "Consumer price inflation is expected to remain broadly flat at current rates throughout the remainder of the year before falling back towards target next year," the BoE said. Despite four rate cuts over the past year, the BoE is proceeding cautiously after aggressive tightening through 2022 and 2023 to combat inflation. Markets currently expect two more 25 basis-point cuts by the end of 2025. Read more: Pound treads water as Bank of England holds interest rates Matthew Ryan, head of market strategy at Ebury, said: 'For now, we are sticking by our call for just two further cuts to the base rate between now and year-end, possibly in August and November, when the latest Monetary Policy Reports will be released. 'We don't believe that the MPC will entertain the idea of lowering rates more aggressively than that just yet." The Bank rate is a key reference point for borrowing and savings products across the UK, affecting everything from mortgage costs to interest on savings accounts. Kevin Mountford, co-founder of Raisin UK, warned of potential volatility in mortgage markets. 'This decision has wide implications for consumers. While Zoopla's House Price Index reported healthy housing sales in May, fixed rates look like they could become unsettled. Consumers looking to borrow should take advantage when they see a good option for them," he said. 'Any decision that has a financial impact for consumers, like buying a new home, is of course a big one and with a high cost of living showing little sign of ease, it can be easy to get stuck in the day to day. The current rates provide consumers with little reassurance but it is essential for people to take a step back and think about the bigger picture." Frances Haque, chief economist at Santander UK, said: 'Aspiring homeowners and those already on the ladder could expect to see mortgage rates continue to hover between the top end of the threes or lower end of the fours. For this to change significantly we'd need to see changes in economic data — and as ever, that could see mortgage rates go up as well as down. "While these may pose bumps in the road for buyers, the traditional increase in home moving we see during the summer will likely continue to drive demand for properties as we enter Q3 which, coupled with affordability improvements, means we expect the 2025 mortgage market will continue to grow.' Across the Atlantic, the US Federal Reserve opted to leave borrowing costs unchanged on Wednesday. The Fed left its outlook for interest rates this year unchanged, with its 'dot plot' indicating another two cuts. Seema Shah, of Principal Asset Management, said that decision was 'somewhat surprising'. She said: 'Any change in this year's dot plot would have been interpreted as a signal that the Fed has a clear plan about its future policy path, when actually the likely truth is that, with the economic outlook still very much shrouded in uncertainty, the Fed is unsure of how things will pan out.' However, some central banks are lowering borrowing costs. The Swiss National Bank (SNB) cut its interest rate to zero on Thursday in response to falling inflation and a stronger Swiss franc. The SNB reduced its policy rate from 0.25%, as had been expected by markets. Norway's central bank surprised markets today by announcing a quarter-point interest rate cut amid the 'uncertain' economic outlook. Norges Bank lowered borrowing costs from 4.5% to 4.25% — its first reduction in five years. Read more: Trending tickers: Alphabet, Amazon, Circle, Shell and Whitbread Bitcoin price steady above $105k as Trump mulls Iran strike Number of million-pound homes for sale in Britain doubles since 2019
Economy ME
15 hours ago
- Business
- Economy ME
Bank of England maintains interest rates at 4.25 percent citing a 'highly unpredictable world'
The Bank of England (BoE) maintained the U.K. interest rates at 4.25 percent on Thursday, citing a 'highly unpredictable world' as the reason for this decision. The Bank's nine-member Monetary Policy Committee (MPC) voted with a majority of six to three in favor of keeping rates unchanged. Three committee members—Swati Dhingra, Dave Ramsden, and Alan Taylor—voted to lower the rate by 0.25 percentage points to 4 percent. Despite Thursday's decision, the Bank emphasized that interest rates are on a 'downward path.' 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 Andrew Bailey, the governor of the Bank of England, stated: 'Interest rates remain on a gradual downward path, although we've left them on hold today. The world is highly unpredictable. In the U.K. we are seeing signs of softening in the labour market. We will be looking carefully at the extent to which those signs feed through to consumer price inflation.' The last time the Bank cut interest rates was in May, when they were reduced by 0.25 percent to the current level of 4.25 percent. U.K. consumer prices increased by 3.4 percent in May on an annualized basis, representing a rise of 0.8 percentage points compared to March. Economists have chosen to overlook the reading from April due to a correction in the Office for National Statistics data. Read more: Bank of England slashes interest rates to 4.25 percent amid global trade uncertainty Norway's first rate cut since pandemic In a similar move, Norway's central bank has reduced interest rates by 25 basis points to 4.25 percent, marking the first cut since the onset of the Covid-19 pandemic. Norges Bank had indicated in March that it anticipated lowering its key sight deposit rate in June and has now followed through on that plan. 'Inflation has declined since the monetary policy meeting in March, and the inflation outlook for the coming year indicates lower inflation than previously expected,' stated Ida Wolden Bache, the central bank's governor. 'A cautious normalization of the policy rate will pave the way for inflation to return to target without restricting the economy more than necessary.' The interest rate cuts were largely anticipated by economists.
Time of India
17 hours ago
- Business
- Time of India
Bank of England keeps rates steady, sees further loosening as jobs market weakens
The Bank of England held interest rates at 4.25% as expected on Thursday but said it was focused on risks from a weaker labour market and higher energy prices as conflict in the Middle East escalates. Noting the elevated global uncertainty and persistent inflation, the Monetary Policy Committee voted 6-3 to keep rates on hold, with Deputy Governor Dave Ramsden joining Swati Dhingra and Alan Taylor to vote for a quarter-point reduction. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Play War Thunder now for free War Thunder Play Now Undo A Reuters poll of economists had forecast an 7-2 vote to keep rates on hold after the central bank cut borrowing costs last month for the fourth time since August 2024. "Interest rates remain on a gradual downward path," BoE Governor Andrew Bailey said, although policymakers added that interest rates were not on a pre-set path. "The world is highly unpredictable. In the UK we are seeing signs of softening in the labour market. We will be looking carefully at the extent to which those signs feed through to consumer price inflation," he added. Live Events The central bank said rising tensions in the Middle East as it held its meeting over the past week had not been key to June's decision to hold rates but would be closely monitored going forward. "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," the BoE said. Nearly all 60 economists polled by Reuters before the BoE's June meeting had predicted it would keep Bank Rate on hold at 4.25% with the next cut likely in August with a further reduction in the final three months of this year. Before Thursday's rate decision, investors were pricing in around two more quarter-point rate cuts by the BoE to 3.75% by December 2025. The central bank kept its guidance saying it would take a "gradual and careful" approach to further rate cuts. But Bank staff analysis struck a less pessimistic tone about the potential impacts of U.S. President Donald Trump's tariffs on the global economy, saying it might be less severe than thought in May. Trade uncertainty would still continue to have an impact on the UK economy, the central bank added. The BoE left its forecast for inflation broadly unchanged for the second half of this year, seeing a peak rate of 3.7% in September and an average of just under 3.5% for the rest of the year. The economy is now expected to grow around 0.25% in the second quarter of this year, slightly stronger than in its May forecast, though it said the underlying pace was weak. Since the middle of last year the BoE has cut interest rates by 1 percentage point, the same as the U.S. Federal Reserve - which on Wednesday held interest rates at the 4.25%-4.50% range - but only half as much as the European Central Bank, which has had less persistent inflation. Markets see just under half a percentage point more easing by the Fed this year and a further quarter-point cut by the ECB. The Fed on Wednesday cut its economic growth forecasts for 2025, raised its inflation projection and said the uncertainty hanging over the economy had diminished but remained elevated. Earlier on Thursday, the Swiss National Bank cut rates by 25 basis points to zero as inflation inflationary pressures decreased and it focused the risk of trade wars for inflation and the global economy.
