One of the oddities about the narrative on the direction of interest rates is the argument that, because consumer price inflation is still above the 2% target, the Bank of England cannot cut interest rates. That suggests that interest rate policy changes immediately impact the current inflation rate in the short term. However, this view …
Bank of England base rate on hold, but cuts could be coming sooner than it forecasts
As expected, the Bank of England left interest rates on hold at its November quarterly meeting. Three members were still calling for rate hikes of a ¼ of one per cent even though the Bank of England lowered its forecast for GDP growth in 2024 from half a per cent to zero and its forecast …
UK Bank rate has peaked
At its February 2023 Monetary Policy meeting, the Bank of England signalled the peak in the Bank rate had been reached. What are the likely reasons for this? Ten interest rate hikes have taken the rate from 0.1% to 4%. The effect has been a housing market in sharp reverse, business failures beginning to rise, …