Category Archives: Bank of England

‘Geopolitical uncertainties’ amid Iran war could slow fall in mortgage rates, says Halifax

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UK house price growth slowed in February as value of typical home rose 0.3% to £301,151

Halifax has warned that the US-Israel war on Iran could slow mortgage rate decreases this year, as it said that house price growth eased dramatically in February.

Halifax, which is part of Lloyds – Britain’s biggest mortgage lender – said the conflict in the Middle East was likely to affect global economies, stoke inflation and reduce the likely rate of interest rate cuts that influence borrowing costs for homebuyers.

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Signs of peak inflation open door to earlier Bank of England interest rate cuts

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Policymakers under pressure for rethink after price growth in UK remained at 3.8% in September

Has UK inflation peaked? The latest official figures showing price growth in the UK stayed at 3.8% in September seem to suggest so.

The statement cannot be made with absolute certainty yet but many economists reacted to the latest consumer prices index (CPI) data with a message that the only direction for inflation over the rest of the year was down.

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UK inflation unexpectedly remains at 3.8% for third month in a row

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Annual September rate confounds forecasts of a rise, as pace of food price growth slows for first time since March

UK inflation was unchanged last month at 3.8%, confounding expectations of a rise, in welcome news for the chancellor, Rachel Reeves, as she plans for her crucial budget next month.

The Office for National Statistics (ONS) said that inflation measured on the consumer prices index remained at the same level in September as in August and July.

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George Osborne says UK has been left behind in cryptocurrency boom

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Ex-chancellor criticises hesitant approach to crypto and warns country in danger of missing next surge in market

The UK has been left behind in the cryptocurrency boom and is in danger of missing a second wave of demand, according to the former chancellor George Osborne.

Osborne, who has an advisory role at the crypto exchange firm Coinbase, said the country already missed out on the first generation of crypto because the formerly sceptical US had embraced digital currencies under Donald Trump.

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Bank of England governor blocks Rachel Reeves’s Revolut meeting

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Concerns about chancellor’s involvement in independent process over fintech’s banking licence

The governor of the Bank of England blocked a meeting that Rachel Reeves tried to secure with watchdogs and Revolut, amid concerns the chancellor was meddling in an independent process over the fintech’s UK banking licence.

Andrew Bailey intervened after learning of the plan to bring together representatives from Revolut, the Treasury and the Bank’s regulatory arm, the Prudential Regulation Authority, to discuss the fintech’s ambitions to become a fully authorised UK bank.

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UK unemployment rises and wage growth slows as jobs market ‘weakens’

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ONS data shows jobless rate climbing to highest rate since June 2021 with growth in average earnings slowing to 5%.

Unemployment climbed and wage growth slowed in the three months to May, according to official figures that will pressure the Bank of England to cut interest rates next month.

Data from the Office for National Statistics, released on Thursday, showed that Britain’s official unemployment rate rose to 4.7% in the three months to May, up 0.1% from April to reach the highest level since June 2021.

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UK inflation eases slightly to 3.4% as food price rises offset transport cost falls

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Annual rate slows in May from 3.5% in April despite record increase in chocolate prices

Inflation in the UK eased slightly to 3.4% last month as a steep fall in air fares and petrol prices was offset by a jump in the cost of food.

May’s decline in the consumer prices index (CPI), down from the official figure of 3.5% for April, complicates the Bank of England’s interest rates decision on Thursday, although policymakers are still almost certain to hold interest rates at 4.25%.

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Rising goods prices could delay UK interest rate cuts, says Bank policymaker

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Bank of England’s Catherine Mann wary of firms looking to rebuild profit margins after a squeeze

Businesses will need to show they are keeping a lid on prices before there can be further interest rate cuts, according to the Bank of England interest rate-setter Catherine Mann.

In a warning to retailers and consumer goods companies to resist pushing up prices by more than the increase in their costs, Mann said she was wary of firms looking to rebuild their profit margins after a squeeze in recent years.

“I need to see the loss of pricing power, I need to see that firms are starting to be much more moderate in setting their prices,” she said.

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UK interest rates fall to 4.25% as Bank of England announces a quarter-point cut

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Move follows run of downbeat economic data and looks to cushion UK from Trump’s trade war fallout

Bank of England policymakers have cut interest rates by a quarter point to 4.25% to cushion the UK economy against the impact of Donald Trump’s trade war.

The widely expected move from the Bank’s monetary policy committee (MPC), its fourth cut since last August, should lead to cheaper mortgages for homeowners.

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Trump tariffs likely to drag down weak UK growth, Bank policymaker warns

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Sarah Breedon says too early to judge impact on inflation of ‘most significant change in trade policy in a century’

UK economic growth will be hit by US tariffs, which are the biggest trade policy change in a century, a senior Bank of England official has warned.

Sarah Breeden, the Bank’s deputy governor for financial stability, said on Thursday that business activity was likely to be adversely affected by Donald Trump’s tariff regime, dragging down the UK’s already weak growth rate.

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Bank ‘should cut UK interest rates to at least 4% in May amid tariff turmoil’

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Ex-Bank of England deputy governor Charlie Bean says cut of 0.5 points needed because of ‘crazy situation’ in US

The Bank of England should use its meeting next month to cut interest rates by at least half a percentage point to 4% in response to the financial turmoil created by Donald Trump’s trade tariffs, the former deputy governor Charlie Bean has said.

He believes an aggressive strategy is needed to combat the fallout from Trump’s tariff war, which has knocked trillions of pounds off global stock markets, undermining business and consumer confidence.

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Bank of England in no hurry on interest rates – but cuts will come

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Despite the decision to hold at 4.5%, businesses and households can take a confident view of the UK’s prospects

Bank of England policymakers might be on a “go-slow” as they look forward to interest rate cuts this year, but the direction of travel is almost certain.

After a meeting on Thursday when interest rates were kept on hold at 4.5%, City investors bet there would be more reductions in the cost of borrowing this year, most likely two cuts reducing the rate to 4%.

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Former Bank of England deputy warns Rachel Reeves against kneejerk cuts

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Charlie Bean says OBR forecasts are ‘flaky’ and cautions against trying to hit targets five years away

The former Bank of England deputy governor Charlie Bean has warned the chancellor against making kneejerk cuts in next week’s spring statement to try to hit fiscal targets that are five years away.

Rachel Reeves is preparing to slash spending, including on disability benefits, in response to weaker forecasts from the independent Office for Budget Responsibility (OBR) – prompting a backlash from within her own party.

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UK economy shrinks unexpectedly in blow to Rachel Reeves

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ONS data showing 0.1% fall in GDP in January comes less than two weeks before chancellor’s spring statement

The UK economy contracted by 0.1% in January, dealing a blow to Rachel Reeves before the spring statement later this month.

In a surprise to City economists, who expected 0.1% growth in January, the Office for National Statistics data showed the services sector failed to offset a decline in the industrial sector and maintain growth from the previous month.

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UK inflation jumps to 3%, reducing chance of early interest rate cut

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Annual CPI inflation rate hit 10-month high in January in blow to ministers amid rise in food bills and fuel costs

UK inflation accelerated faster than expected at the start of this year, eating into workers’ wages and reducing the chance of an interest rate cut next month.

The consumer prices index (CPI) measure rose to 3% in January, the Office for National Statistics reported, up from 2.5% in December.

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UK economy grows by 0.1% in unexpected boost for Rachel Reeves

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ONS data showing British national output rose in final quarter of 2024 confounds forecasts of 0.1% decline

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Britain’s economy unexpectedly picked up in the final three months of 2024, official figures have shown, easing pressure on the chancellor, Rachel Reeves, after flatlining during the summer.

Figures from the Office for National Statistics show gross domestic product rose by 0.1% in the fourth quarter of 2024 – after zero growth in the previous three months – to beat the forecasts of City economists and the Bank of England for a decline of 0.1%.

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Bank of England’s Mann backed rate cut as she sees inflation ‘hump’ easing

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Downturn in jobs market will mean workers will be unlikely to be able to bid up their wages, says policymaker

The Bank of England policymaker Catherine Mann has said she backed a half-point cut in UK interest rates last week because she believes the downturn in the jobs market will make the inflation “hump” this year short-lived.

Mann surprised financial markets last week by switching from voting against the Bank’s last cut, in November, to supporting a half-point reduction.

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‘Stagflation’ fears as Bank of England cuts growth forecast and warns of price rises

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UK economy expected to grow by just 0.75% this year, in fresh blow to Rachel Reeves’s attempts to raise confidence

Rachel Reeves’s plans for growth suffered a double blow after the Bank of England halved its forecast for the year and warned households would face mounting pressure from rising prices.

In a downbeat assessment as it cut interest rates for a third time in six months, Threadneedle Street warned people would face a fresh squeeze on living standards from rising inflation even as the economy stalled.

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Unambiguously bleak Bank of England forecasts pave way for spending cuts

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Weak jobs market and above-target inflation will dent Reeves’s growth plans and may wipe out fiscal headroom

With the public finances tight and Rachel Reeves having pledged to balance the books, interest rate cuts are one of the few levers that could boost the UK’s economic growth in the short term, and the chancellor will be glad of the Bank of England’s quarter-point reduction on Thursday – and the clear signal that it is now in cutting mode.

Seven of the monetary policy committee’s (MPC) nine members backed the quarter-point drop, taking the Bank’s policy rate to 4.5%, while two wanted to be more “activist”, proposing a half-point cut. The Bank of England’s governor, Andrew Bailey, said the MPC would be “taking a gradual and careful approach to reducing rates further”.

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Bank of England cuts interest rates to 4.5% and halves UK growth forecast

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Latest quarter-point reduction comes with warning households face inflation of 3.7% by autumn

The Bank of England has cut interest rates to 4.5%, as it halved its UK growth forecasts for the year and warned households would face renewed pressure from rising prices.

With the government under fire over the sluggish economy, the Bank’s monetary policy committee (MPC) voted by a majority of seven to two to reduce its key base rate, down from 4.75%, to provide some financial relief to borrowers.

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