Bank Of England Holds Rate At 16-Year High Despite Slowing Inflation

RTTNews | 28 days ago
Bank Of England Holds Rate At 16-Year High Despite Slowing Inflation

(RTTNews) - The Bank of England retained its key policy rate on Thursday at a 16-year high despite inflation easing to the 2 percent target as policymakers are still concerned about services inflation and wage growth.

The Monetary Policy Committee, led by Governor Andrew Bailey, decided to hold the bank rate at 5.25 percent again in a split vote. The current bank rate is the highest since early 2008.

The rate has been kept unchanged for the seventh straight session. Governor Bailey, outgoing member MPC Ben Broadbent and five other members voted to keep the rate unchanged, while two members sought a reduction.

Swati Dhingra and Dave Ramsden again called for a 25 basis-point cut as they said the interest rate needed to become less restrictive now to enable a smooth and gradual transition in the policy stance, and to account for lags in transmission.

Some members in the no-change camp said today's decision was "finely balanced".

Policymakers said they remained prepared to adjust monetary policy as warranted by economic data to return inflation to the 2 percent target sustainably.

The MPC said it would continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole, including a range of measures of the underlying tightness of labor market conditions, wage growth and services price inflation.

Inflation softened to the 2 percent target in May. Consumer price inflation is expected to increase slightly in the second half of this year, as declines in energy prices last year fall out of the annual comparison.

BoE staff forecast the UK economy to expand 0.5 percent in the second quarter, which was stronger than the 0.2 percent projected in May.

There is a good chance of a rate cut in August and that rates will fall to 3.00 percent in 2025, rather than to 4.00 percent as investors expect, said Capital Economics economist Ruth Gregory.

Track market moving Economic Events that impact Commodities, Stock, and Forex by using realtime RTTNews Economic Calendar this week.

read more
UK Labor Market Cools In May

UK Labor Market Cools In May

UK wage growth softened in the three months to May period suggesting that the labor market cooled further and revived hopes of interest rate cuts. The unemployment rate came in at 4.4 percent in March to May period, unchanged from the preceding three months, the Office for National Statistics said Thursday. The figure matched economists' forecast.
RTTNews | 11h 46min ago
UK Inflation Steady At 2.0%

UK Inflation Steady At 2.0%

UK inflation remained unchanged at the official target in June but the stability of services inflation reduced chances of a rate cut in August. The consumer price index grew 2.0 percent on a yearly basis, the same pace of growth as seen in May, the Office for National Statistics said Wednesday. Headline inflation was expected to ease to 1.9 percent.
RTTNews | 1 day ago
UK Economy Rebounds In May

UK Economy Rebounds In May

The UK economy rebounded at a faster-than-expected pace in May underpinned by broad-based expansion in services, manufacturing and construction industries, official data showed on Thursday. Real gross domestic product grew 0.4 percent in May after showing no growth in April, the Office for National Statistics reported. The actual growth was double the expected 0.2 percent expansion.
RTTNews | 7 days ago
UK Retail Sales Fall In June: BRC

UK Retail Sales Fall In June: BRC

UK retail sales declined in June as the cold weather in the first half of the year weighed on consumer spending, the British Retail Consortium said on Tuesday. Total retail sales fell 0.2 percent in June from the previous year. BRC Chief Executive Helen Dickinson said the sales of weather sensitive categories such as clothing and footwear, and DIY and gardening were hit particularly hard.
RTTNews | 9 days ago
UK House Prices Drop In June: Halifax

UK House Prices Drop In June: Halifax

UK house prices dropped in June after remaining stable for two straight months, signaling that the property market remained subdued, mortgage lender Halifax reported Friday. House prices fell 0.2 percent month-on-month in June, in contrast to the expected increase of 0.2 percent. A typical UK house costs GBP 288,455. Compared to the last year, house prices climbed 1.6 percent.
RTTNews | 13 days ago
UK Construction Expands For Fourth Straight Month

UK Construction Expands For Fourth Straight Month

The UK construction sector remained in the growth territory for the fourth straight month in June but the pace of expansion softened amid a renewed fall in housing activity, survey data from S&P Global showed on Thursday. The headline construction Purchasing Managers' Index posted 52.2 in June, down from 54.7 in May. A reading above 50.0 signals expansion.
RTTNews | 14 days ago
UK Mortgage Approvals Fall In May

UK Mortgage Approvals Fall In May

The number of mortgages approved by British lenders declined in May on higher mortgage rates, data published by the Bank of England showed on Monday. Mortgage approvals, an indicator of future borrowing, decreased to 60,000 in May from 60,800 in April. Approvals were forecast to fall to 59,900. The effective interest, which is the actual interest paid on newly drawn mortgages rose 5 basis points.
RTTNews | 17 days ago
UK House Price Growth Slows In June: Nationwide

UK House Price Growth Slows In June: Nationwide

UK house prices increased at a slower pace in June as housing affordability remained stretched, mortgage lender Nationwide said on Monday. House prices gained 0.2 percent on a monthly basis, which was slower than the 0.4 percent rise registered in May. House prices were expected to remain flat in June. Year-on-year, house prices posted a growth of 1.5 percent in June after rising 1.3 percent.
RTTNews | 17 days ago