Category Archives: Monetary policy committee

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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Big drop in UK inflation rate disguises more disappointing details

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Service sector inflation, monitored closely by Bank of England, barely budged in April

The annual inflation rate fell sharply in April. Prices are rising more slowly than at any time in almost three years. Inflation is lower in the UK than it is in the EU.

Even so, the latest bulletin on the cost of living from the Office for National Statistics was mildly disappointing. April’s inflation figure was always going to be good, with a sharp fall guaranteed by the fact the energy price increases of a year earlier were not repeated.

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UK inflation falls by less than expected to 2.3%, reducing chance of June rate cut

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Drop in April is smaller than forecast but level is still lowest in almost three years

UK inflation fell to 2.3% in April – its lowest level for almost three years – but the decline was smaller than expected, denting hopes of an early interest rate cut.

City analysts had forecast the annual increase in the cost of goods and services would fall to 2.1%, close to the Bank of England’s 2% target.

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Interest rates need to stay higher for longer, says Bank of England policymaker

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Megan Greene dampens hopes of August cut while underlying causes of inflation remain ‘persistent’

Cuts in UK interest rates should be “a way off”, according to a Bank of England policymaker, who has said that inflationary pressures will keep the cost of borrowing higher than financial markets expect.

Megan Greene, a member of the Bank’s nine-member monetary policy committee (MPC), which sets interest rates, said financial markets were betting “in the wrong direction” when they judged how quickly the central bank would make its first rate cut.

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Clare Lombardelli named deputy governor of Bank of England

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Ex-Treasury official and adviser to David Cameron will replace Ben Broadbent, making MPC majority female for first time

The Bank of England’s interest-rate-setting committee is set to become majority female for the first time, after the appointment of a former key adviser to David Cameron and George Osborne as one of its deputy governors.

Clare Lombardelli, the chief economist at the Organisation for Economic Co-operation and Development (OECD), will sit on the nine-member monetary policy committee (MPC) when she joins as the Bank’s next deputy governor for monetary policy.

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Bank of England governor dampens hopes of interest rate cut

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Andrew Bailey says cost of living had been higher than expected in December despite ‘encouraging’ inflation news

The Bank of England governor has doused hopes that better-than-expected inflation news last month will accelerate cuts in interest rates, stressing the need for further evidence of wage moderation before Threadneedle Street moves.

Appearing before the House of Lords economics committee on Wednesday, Andrew Bailey said it was “encouraging” that inflation had remained unchanged at 4% in January but the previous month’s figure for the cost of living had been higher than predicted.

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Bank of England keeps interest rates on hold as concern about economy grows

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Interest rates will need to stay high for sufficiently long to return inflation to 2% target

The Bank of England has said Britain is facing a tougher job to crush persistently high inflation than other advanced nations, as it kept interest rates on hold at the highest level since the 2008 financial crisis.

Pushing back against expectations in financial markets for a deep round of interest rate cuts next year, the central bank said there was still a long way to go before it could declare victory on inflation, despite a worsening outlook for the UK’s stagnant economy.

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UK firms ‘slow output and rein in hiring as borrowing costs rise’

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Survey of businesses gives further indication that Bank of England could limit future interest rate rises

Businesses are pulling back on hiring and slowing their output under the strain of rising borrowing costs, according to a study that gives a further signal that the Bank of England could limit future interest rate rises.

A modest pickup in manufacturing in August failed to prevent a slowdown in broader UK private sector economic activity, a survey of businesses by the accountancy firm BDO found.

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Economists call for radical shakeup of Bank’s interest rate committee

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MPC is dominated by people with little ‘real world’ knowledge and prone to groupthink, says ex-committee member

Members of the Bank of England’s interest-rate setting body should be appointed by the devolved administrations and by English MPs in order to counter groupthink, a former member of Threadneedle Street’s monetary policy committee has said.

David Blanchflower said the committee was dominated by people with little knowledge of the “real world”, and greater diversity of thought was needed to ensure the interests of ordinary people were reflected.

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Bank of England will not take foot off throttle despite drop in inflation

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MPC members will look at other developments in UK and abroad in mission to increase interest rates

The drop in inflation from 10.1% in July to 9.9% last month is not going to trouble the Bank of England’s policymakers when they meet next week to set interest rates. Its monetary policy committee (MPC) is on a mission to increase the cost of borrowing to bring down inflation to 2%. Prices growth that sticks at almost 10% is still too high. One month’s figures are not a trend.

The nine MPC members will also ponder several other developments at home and abroad that can be considered reasons to increase interest rates.

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Bank of England hikes interest rates and says inflation will hit 13%

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Base rate raised by 0.5 percentage points to 1.75%, as Bank says inflation will hit 13% in October

Vladimir Putin’s invasion of Ukraine has left Britain on course for a recession lasting more than a year and inflation above 13%, the Bank of England has warned as it raised interest rates for a sixth successive time.

Threadneedle Street said it had no choice but to increase borrowing costs by 0.5 percentage points to 1.75%, blaming Russia for cost of living pressures not seen in more than four decades and a 5% drop in living standards straddling this year and next – the biggest since records began in the 1960s.

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