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Bank of England keeps interest rates at 5.25%

Blurred buses pass the Bank of England in the City of London on February 7, 2024 in London, United Kingdom.

Mike Kemp | In pictures | Getty Images

LONDON — The bank of england On Thursday, interest rates were held at 5.25%, but hinted at cuts on the horizon as inflation falls faster than expected.

The Monetary Policy Committee voted 8-1 to keep rates steady, with one member voting in favor of a 25 basis point cut to 5%. It’s worth noting that no members voted in favor of further hikes for the first time this cycle, after two members voted in favor of a quarter-point increase at the meeting former.

Global inflation slipped more than expected to an annual rate of 3.4% in Februaryreaching its lowest level since September 2021, according to data released on Wednesday.

The central bank expects the consumer price index to return to its 2% target in the second quarter, with the cap on household energy prices lowered again in April.

“Overall CPI inflation continued to decline relatively sharply, partly due to base effects and external effects of energy and goods prices,” the MPC said in its report.

“The restrictive stance of monetary policy weighs on real economy activity, leads to a more flexible labor market and weighs on inflationary pressures. Nevertheless, key indicators of inflation persistence remain high. “

THE The British economy has fallen into a technical recession in the final quarter of 2023 and has endured two years of stagnation, meaning the central bank is performing a precarious balancing act between bringing inflation sustainably to 2% and avoiding pushing the economy into a prolonged slowdown.

Major central banks around the world are trying to determine when to start easing monetary policy after two years of rapid tightening, in a bid to stem a surge in global inflation.

THE US Federal Reserve Wednesday rates remained stable and stuck to his forecast of three rate cuts this year, as Chairman Jerome Powell sought to confirm that inflation is returning to the 2% target despite a recent spate of higher-than-expected readings.

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