Latest news with #UKEconomy
The Sun
13 hours ago
- Business
- The Sun
Bank of England keeps interest rates unchanged leaving home-buyers to wait for loan cuts
HOME-buyers were made to wait for loan cuts as Bank chiefs held steady on interest rates. Borrowing costs were kept at 4.25 per cent yesterday as oil prices rise because of the Israel - Iran conflict and inflation remains stubbornly high. 1 Businesses were also found to be increasingly reluctant to hire staff. Six members of the Bank of England Monetary Policy Committee voted to stick with the same rate, with the other three calling for a cut of 0.25 per cent. 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.' Mr Bailey added: '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 Tories last night said interest rates are staying higher for longer due to Labour' s Jobs Tax and borrowing which is driving up inflation and killing growth. Shadow Chancellor Mel Stride Rachel Reeves has a secret plan to raise taxes. "Make no mistake – more taxes are coming." Chancellor Rachel Reeves told The Times CEO Summit that she wants the Bank to set the right policy for bringing down inflation to the 2 per cent target. She added that double-digit inflation seen a few years ago 'was so challenging for businesses, but also family finances, which also has a knock on impact on business'.
Yahoo
21 hours ago
- Business
- Yahoo
Bank's rate decision leaves frustrated Reeves praying for an August cut
Last week's spending review revealed Rachel Reeves's plan for reviving the UK's struggling economy – but one of the most powerful levers for unleashing growth lies out of her reach, at the Bank of England. Thursday's no-change decision on interest rates from the Bank's nine-member monetary policy committee (MPC) was widely expected; but the chancellor and her colleagues will be fervently hoping for a cut in August, perhaps sooner – and more before the year is up. The Bank's governor, Andrew Bailey, had already warned the pace of rate cuts looked uncertain, as a result of Donald Trump's trade wars. The alarming prospect of a fresh conflict in the Middle East is likely to have made MPC members even more cautious. The minutes from Thursday's meeting suggested the MPC would 'remain sensitive to heightened unpredictability in the economic and geopolitical environment,' and would 'continue to update its assessment of risks to the economy'. Evidence of rising food prices in the latest inflation data is also likely to have preyed on their minds – driven in part by climactic challenges, including the poor harvests that triggered the largest annual increase in chocolate costs on record. Inflation is expected to remain around its current level of 3.4% for the rest of the year – well above the Bank's 2% target. Yet the minutes did also suggest the balance of opinion is shifting towards loosening policy, as the jobs market continues to slow down, helping to alleviate concerns about bumper wage deals driving up inflation. The MPC now expects the impact of Trump's tariffs to be less dramatic than at its last forecast in May, given various concessions and deals – though they stress that 'trade policy uncertainty would nevertheless continue to have an impact on the UK economy'. Dave Ramsden, deputy governor, voted for a quarter-point cut, to 4% – joining the external members Alan Taylor and Swati Dhingra, both of whom wanted a bigger-than-consensus half-point reduction in May. The paragraph of the minutes that set out their argument pointed to the fact that 'the cumulative evidence from a range of labour market data pointed to a material further loosening in labour market conditions'. Ramsden has previously been slightly ahead of the consensus in moving to cut – he was ready for rates to come down in May last year, three months before the eventual reduction in August; and wanted to see a cut in December, that didn't happen until February. The other two doves voted for a bumper half-point cut in May, so it is no surprise that they would have liked to have seen another reduction on Thursday. Dhingra told MPs on the Treasury select committee recently that she was becoming increasingly concerned about the risk that holding policy 'too tight' for an extended period – ie keeping rates high – risked undermining the economy's potential to grow. Bailey confirmed alongside Thursday's no-change decision that rates remained on a 'gradual downward path'. That appears to point to another quarter-point cut in August. Reeves will be hoping the MPC picks up the pace.
The Guardian
a day ago
- Business
- The Guardian
Bank's rate decision leaves frustrated Reeves praying for an August cut
Last week's spending review revealed Rachel Reeves's plan for reviving the UK's struggling economy – but one of the most powerful levers for unleashing growth lies out of her reach, at the Bank of England. Thursday's no-change decision on interest rates from the Bank's nine-member monetary policy committee (MPC) was widely expected; but the chancellor and her colleagues will be fervently hoping for a cut in August, perhaps sooner – and more before the year is up. The Bank's governor, Andrew Bailey, had already warned the pace of rate cuts looked uncertain, as a result of Donald Trump's trade wars. The alarming prospect of a fresh conflict in the Middle East is likely to have made MPC members even more cautious. The minutes from Thursday's meeting suggested the MPC would 'remain sensitive to heightened unpredictability in the economic and geopolitical environment,' and would 'continue to update its assessment of risks to the economy'. Evidence of rising food prices in the latest inflation data is also likely to have preyed on their minds – driven in part by climactic challenges, including the poor harvests that triggered the largest annual increase in chocolate costs on record. Inflation is expected to remain around its current level of 3.4% for the rest of the year – well above the Bank's 2% target. Yet the minutes did also suggest the balance of opinion is shifting towards loosening policy, as the jobs market continues to slow down, helping to alleviate concerns about bumper wage deals driving up inflation. The MPC now expects the impact of Trump's tariffs to be less dramatic than at its last forecast in May, given various concessions and deals – though they stress that 'trade policy uncertainty would nevertheless continue to have an impact on the UK economy'. Dave Ramsden, deputy governor, voted for a quarter-point cut, to 4% – joining the external members Alan Taylor and Swati Dhingra, both of whom wanted a bigger-than-consensus half-point reduction in May. The paragraph of the minutes that set out their argument pointed to the fact that 'the cumulative evidence from a range of labour market data pointed to a material further loosening in labour market conditions'. Ramsden has previously been slightly ahead of the consensus in moving to cut – he was ready for rates to come down in May last year, three months before the eventual reduction in August; and wanted to see a cut in December, that didn't happen until February. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion The other two doves voted for a bumper half-point cut in May, so it is no surprise that they would have liked to have seen another reduction on Thursday. Dhingra told MPs on the Treasury select committee recently that she was becoming increasingly concerned about the risk that holding policy 'too tight' for an extended period – ie keeping rates high – risked undermining the economy's potential to grow. Bailey confirmed alongside Thursday's no-change decision that rates remained on a 'gradual downward path'. That appears to point to another quarter-point cut in August. Reeves will be hoping the MPC picks up the pace.
Yahoo
a day ago
- Business
- Yahoo
UK interest rates kept on hold with Bank alert to ‘highly unpredictable' world
UK interest rates have been left on hold as the Bank of England said it was keeping watch on a 'highly unpredictable' world amid rising energy prices. 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. It also pointed to waning business sentiment amid weak growth in the UK economy, with demand not expected to recover until 2026.
Washington Post
2 days ago
- Business
- Washington Post
UK inflation eases by less than anticipated ahead of Bank of England rate decision
LONDON — Inflation in the U.K. dropped modestly in May as a drop in air fares and transport costs were largely offset by rising food prices, particularly chocolate, official figures showed Wednesday. The Office of National Statistics said consumer prices rose by 3.4% in the year to May, down from 3.5% the previous month.
