UK interest rates: Bank of England announces interest rate decision after inflation falls

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The Bank of England kept interest rates unchanged for seven consecutive months despite falling inflation.

On Thursday, the bank chief left interest rates unchanged at 5.25% in another blow to workers, homeowners and borrowers.

That's according to official figures released on Wednesday that showed inflation falling to the bank's 2% target for the first time in almost three years, from 2.3% in May.

The latest inflation figures mean prices are still rising across the country, but at a much slower pace than in recent years, when households and businesses were under pressure at the height of the cost crisis.

Following the fall in inflation, the Confederation of British Industry (CBI) said the stage was now set for the bank to cautiously cut interest rates in August.

CBI Chief Economist Martin Sartorius said on Wednesday: Today's data sets the stage for the Monetary Policy Committee to cut interest rates in August, in line with our latest forecast expectations.

Key PointsShow Latest Updates 1718902829ICYMI: No interest rate cut despite inflation reaching 2% target, Bank of England says

Homeowners struggling to meet surging mortgage payments will have to wait at least two months for borrowing costs to fall after the bank's nine-member monetary policy committee decided on Thursday to keep interest rates at 5.25% for a seventh straight month. .

Matt MathersJune 20, 2024 18:00

1718899229Borrowers are crying out for help, but interest rate cuts may not come until November.

Struggling homeowners are desperate for a long-awaited cut in their mortgage costs.

But with a change in government expected, the Bank of England may have to wait until late autumn, says James Moore.

Read James' full article here:

Matt MathersJune 20, 2024 17:00

1718895927ICYMI: How does inflation affect interest rates and mortgage rates?

Matt MathersJune 20, 2024 16:05

1718893154Interest rate freeze is not surprising – Quilter Investors

“Inflation reaching 2% marks an important milestone, but not enough for the Bank of England to declare work done,” said Lindsay James, investment strategist at Quilter Investors.

Instead, the Monetary Policy Committee decided to freeze interest rates once more.

While it will be a bitter blow for the Conservatives, the decision is not at all surprising given the monthly figures show inflation is unlikely to remain at 2% for long.

Instead, it is expected to rise again later this year, ultimately settling between 2% and 3%.

The bank will be keeping a close eye on wage growth, which is hovering around 6%, and services inflation, which will take time to decline and continue to contribute to higher core inflation.

Sunshine for the Bank of England on Thursday, more gloom for borrowers (EPA)

Matt MathersJune 20, 2024 15:19

1718892220I am disappointed with the rate freeze – small and medium-sized business

Commenting on the Bank of England's (BoE) interest rate decision recently, Martin McTague, National Chairman of the Federation of Small Businesses (FSB), said: “But again, MPC chose adherence over distortion. This is a move that was widely expected, but didn't really disappoint. For that.

Currently stagnating high interest rates are dampening growth as small and medium-sized businesses struggle to access affordable finance for expansion.

Inflation has now returned to target levels and holding off on cutting interest rates until a future date risks blocking tentative signs of a GDP recovery, with stagnant growth in April a warning sign.

Matt MathersJune 20, 2024 15:03

The pound fell against the US dollar after the interest rate decision.

The pound fell against the US dollar and euro following the Bank of England's interest rate decision.

Sterling was trading down 0.2% at $1.269 and 0.1% at 1.183 euros.

Matt MathersJune 20, 2024 14:06

1718886029ICYMI: Bank of England plans to keep interest rates on hold to avoid rocking the boat before the election.

Hopes that the Bank of England could start cutting interest rates this month could be dashed as experts expect policymakers not to rock the boat ahead of the general election.

The central bank is expected to announce its latest decision on interest rates on Thursday.

Matt MathersJune 20, 2024 13:20

1718884229How does inflation affect interest rates and mortgage rates?

Matt MathersJune 20, 2024 12:50

The bank governor says inflation must be kept low.

“Authorities must ensure that inflation remains low before cutting interest rates,” said Andrew Bailey, the bank's governor.

The decision comes a day after the Prime Minister declared the target had been reached after official figures showed inflation hit the bank's 2% target in May for the first time in nearly three years. .

But some policymakers on the bank's nine-member Monetary Policy Committee (MPC) felt they needed more evidence of a reduction in inflation persistence before they could safely cut interest rates.

In particular, I felt that service inflation, which only looks at prices related to services such as accommodation and culture, is still stubborn, and wage growth is also rising faster than expected.

british economy

Matt MathersJune 20, 2024 12:21

1718881987IPPR: Interest rates have been too high for too long

One economic think tank says interest rates have been too high for too long.

Dr George Dibb, IPPR's Deputy Director of Economic Policy, said: The Bank of England has screwed the screws too tight for too long, hindering the UK's economic recovery. It had to follow the European Central Bank by starting to cut interest rates today.

Banks must balance persistent inflation, particularly in the services sector, with Britain's zero economic growth and a cooling labor market. With inflation expectations falling back to pre-pandemic levels, it is time for banks to change course, provide more support for the economy and cut interest rates.

Matt MathersJune 20, 2024 12:13

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