Category Archives: Interest rates

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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Inflation figures to ‘make or break’ the case for an Australian pre-election February rate cut

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Release of December quarterly CPI may be the most politically consequential set of numbers in recent times

Inflation figures due out on Wednesday could “make or break” the case for a pre-election rate cut next month, according to economists, in one of the most politically consequential set of numbers of recent times.

The market is pricing in an 84% chance of a 25 basis-point rate cut when the Reserve Bank of Australia (RBA) meets mid-next month, although those odds will rise or fall based on the December quarterly consumer price index.

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FTSE 100 hits record as interest rate hopes push down UK borrowing costs

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Nearly every share on index rose after fall in value of pound helped multinationals listed in London

The UK’s blue-chip stock index has hit a record high, as hopes of interest rate cuts this year drove down government borrowing costs.

Almost every share on the FTSE 100 rose on Friday, the fall in the value of the pound bolstering multinationals listed in London and propelling the index above 8,500 points for the first time.

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Australia’s housing market ‘buckling’ under widening gap between income and home values, report finds

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Housing prices fell by 0.1% in December but dip likely to be ‘shallow and short-lived’, according to CoreLogic

Australia’s housing downturn is being driven by a widening gap between income, borrowing capacity and home values, but the dip is likely to be “shallow and short-lived”, a new report has found.

In December, Australia’s property market eased with home values falling 0.1% after a flat result in November and a gradual slowdown over last year, according to CoreLogic.

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UK interest rates to fall more slowly than expected after budget, claims report

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Government’s spending and borrowing plans mean rates will stay higher for longer, according to OECD

UK interest rates will fall by less than expected over the next two years after Rachel Reeves revealed significant spending and borrowing plans in the budget, according to an influential report.

In its annual economic survey, the Organisation for Economic Cooperation and Development (OECD) said UK inflation would also surpass previous forecasts next year, and upgraded growth projections for the economy, because of boost from October’s budget.

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UK’s inflation jump dashes hope of interest rate cut in December | Heather Stewart

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Rate cut unlikely until 2025 as energy prices blamed for stronger-than-expected inflation of 2.3%

Any lingering hope that the Bank of England might deliver a pre-Christmas interest rate cut next month appears to have evaporated, after official data showed inflation jumping to 2.3% in October.

The CPI measure had been expected to tick up, after dipping to 1.7% in September, but 2.3% was stronger than expected.

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Australia politics live: Dutton calls Labor’s international student caps bill ‘a dog’s breakfast’; RBA fuels expectations for February interest rates cut

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First investment announced as part of National Reconstruction Fund

The science and industry minister, Ed Husic, was on ABC News Breakfast to discuss the government’s first investment via the National Reconstruction Fund – $40m to a Toowoomba mineral processing factory.

The difference in terms of what the [NRF] does is it provides loans, equity, and guarantees to firms that are [working across] seven priority areas to expand and grow their operations.

Given the sizes of the investments, it does take more time to be able to go through to shape up what the investment will look like, how big it’ll be, over what term, the rate of return – because the other important thing to stress to viewers is – this is not about handing out grants, and certainly not doing it on the basis of political colour-coded spreadsheets as we saw with the last government.

In fact, the social media users were less likely to have a negative attitude towards Jewish and Muslim people, irrespective of where they were on the political spectrum.

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Keir Starmer denies budget to blame for rise in mortgage rates

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PM says budget stabilised the economy, while mortgage rates are ‘individual decisions for the banks’

Keir Starmer has conceded he was disappointed in the UK growth figures last week, but denied that his government’s budget was responsible for a recent rise in mortgage rates.

The prime minister told journalists travelling to the G20 summit in Rio: “What we have done with the budget is to stabilise the economy and that, in my view, was the essential first step.

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Shadow chancellor warns Reeves over EU ties after Bank chief says Brexit harming economy – as it happened

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Mel Stride said there must be no suggestion of the UK going back into the EU single market or customs union

In news that will disappoint those of you who enjoy a Liberal Democrat stunt, PA has just reported that Ed Davey will not, as was planned, be taking a bus-driving lesson at a depot in Oxfordshire, due to logistical issues. Instead he will be visiting high-street businesses.

It is part of a campaign by the Liberal Democrats to get Labour to keep the bus fare price cap at £2 in England when it extends the scheme into next year.

The fare cap increase is like a bus tax for people across the country, impacting bus users and commuters already struggling to make ends meet. MPs must be given a say on this bus fare hike on behalf of their constituents.

Our communities have already paid too high a price for years of Conservative neglect and incompetence. This bus fare hike will hit cherished local businesses and high streets, many of which are already struggling.

Uncertainty around Labour’s first budget and high interest rates played their part, but [the GDP figures are] still a blow for Rachel Reeves, as [it] underlines difficulty of reaching her ambitious growth target.

Some in Labour want to recalibrate economic focus away from growth and towards cost of living ie “will people feel better off by time of next election?”

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City analysts overwhelmingly predict Bank of England interest rate cut

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Rare agreement among forecasters gives 96% chance of today’s MPC meeting cutting borrowing costs to 4.75%

The Bank of England policymakers are widely expected to cut borrowing costs for businesses and homeowners by reducing official interest rates from 5% to 4.75% when they meet later today.

Financial markets are overwhelmingly forecasting that the Bank’s nine-strong monetary policy committee (MPC) will reduce rates for a second time when it announces its latest decision at noon.

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Australia politics live: Albanese tells caucus Labor will campaign on ‘risk’ of Dutton; Miles returns as Queensland Labor leader

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‘We need to extend the average time people stay in our defence force,’ says Matt Keough

The defence personnel minister, Matt Keough, has also been talking about that retention and renumeration package for defence.

We need to extend the average time people stay in our defence force.

That does mean it had a vulnerability. We’re looking at moving to more of a mesh-type arrangement of satellites, which provides greater resilience, with a more up-to-date technology, and we’ll be able to deliver the technology faster as well.

We are very much confident that we can meet these targets and that’s because we have properly funded them and we have a plan to get there, which is about really improving the terms of service for those who work in our defence forces.

We’re increasing and expanding the bonuses for continuing on in the defence force. We’re continuing the original retention bonus after your initial service obligation for three years and beyond that. There will be another bonus for people who stay in the defence force after that. And that’s really targeting those who are in their seventh, eighth, ninth years of service, which gets to the middle ranks where we’ve got an issue. And we’re also going to grow the active reserves so there are more opportunities for people in the reserve to do full-time or part-time work in the defence force.

This original plan goes back seven or eight years and it was about having two or three satellites above Australia to deliver that capability. Since then, we have seen technologies develop which can shoot satellites out of the sky but we have also seen technologies develop where you have thousands of micro satellites in a more distributed way providing the same effect and we are seeing that with Starlink above Ukraine.

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UK interest rates to fall to 2.75% by next autumn, Goldman Sachs predicts

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Economists at investment bank say markets are underestimating likely extent of action by Bank of England

Interest rates are on course to fall to 2.75% by next autumn after the Bank of England reduces the cost of borrowing at each of its nine next meetings, a leading investment bank has predicted.

Economists at Goldman Sachs said that, according to their assessment of the long-term level of interest rates consistent with achieving the government’s 2% inflation target, markets were underestimating the likely extent of the action by Threadneedle Street’s nine-strong monetary policy committee (MPC).

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UK inflation falls below 2% for first time since 2021 in boost to Rachel Reeves

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Surprise annual drop to 1.7% in September raises chance of interest rate cuts, increasing budget leeway

Inflation in the UK has fallen to its lowest level in three and a half years, giving a pre-budget boost to Rachel Reeves as expectations grow for the Bank of England to cut interest rates.

Figures from the Office for National Statistics show the consumer prices index dropped sharply to 1.7%, down from 2.2% in August, in a bigger fall than anticipated in financial markets, driven by lower air fares and petrol prices.

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Fixed and variable home loans fall ahead of expected cash rate cut by RBA

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Australia’s interest rate is forecast to fall from 4.35% to 3.6% by this time next year, prompting seven lenders to cut their rates this week

Lenders have started lowering their mortgage rates en masse influenced by expectations of future interest rate cuts by the Reserve Bank – moves that could tempt borrowers to restructure their home loans.

The downward drift in rates is especially prevalent in fixed loans, with seven lenders cutting their rates by an average of 0.3 percentage points over the past week, according to Canstar. Four lenders cut variable rates by smaller margins.

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Australia’s housing crisis may be starting to ease as home prices fall in four capital cities

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New data also shows auction figures softening while rent rises are at their slowest pace in years

Australia’s housing crisis may be starting to ease with dwelling price rises tapering off and rents increasing at their slowest pace in four years, data groups say.

Property values increased 0.4% in September, close to the 0.3% rise recorded for both the previous two months, CoreLogic reported. PropTrack’s housing index was basically flat, rising just 0.04% for the month.

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Stock markets hit record highs after news of a fall in US inflation

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S&P 500 index of major US companies registers near 100% gain on year ago amid expectation of interest rate cuts

A fall in US inflation expected to pave the way for further cuts in interest rates pushed stock markets to record highs on Friday.

Ending a week of gains that began when the Chinese authorities approved a huge economic stimulus package, the S&P 500 index of major US companies soared above 5,750 to register a near 100% gain on a year ago.

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RBA warns two factors risk increasing number of Australians caught in mortgage struggle

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Vast majority of borrowers servicing their debts but arrears could grow if economy slows more than expected, bank says

The number of Australians in financial stress is “small” but will be “magnified” if the economy slows more than expected or interest rates linger higher for longer, the Reserve Bank has warned.

While overseas challenges – including a faltering Chinese economy – could also upset forecasts, Australia’s financial system continued “to display a high level of resilience”, the bank said in its semi-annual financial stability review.

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No talk of hikes, no cut on the horizon: why RBA thinks it’s in the ‘right spot’ with interest rates

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There was good news and bad news as Australia’s central bank held the interest rate steady for the seventh time in a row

The good news is the Reserve Bank is all but done lifting interest rates. Less good news is that the central bank is also not about to cut them.

Those were probably the key takeaways from the RBA’s sixth board meeting of 2024 and the seventh since it last slugged borrowers with it’s last cash rate hike.

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Peter Hannam is Guardian Australia’s economics correspondent

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No cuts in ‘near term’ as RBA leaves Australia’s official interest rate unchanged at 4.35%

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RBA decision was in line with economists’ forecasts as economy endures persistent inflationary pressures

The governor of the Reserve Bank, Michele Bullock, says she does not see interest rate cuts “in the near term” as the central bank waits for clearer evidence inflation is in retreat before it begins cutting borrowing costs.

The RBA ended its latest two-day board meeting on Tuesday by keeping its cash rate at 4.35%, the level its remained since November. The decision was as economists had expected.

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