The Bank of England yesterday kept its main interest rate unchanged at 5 percent despite a big cut from the US Federal Reserve, its first since the onset of the COVID-19 pandemic more than four years ago.
The decision was widely expected amid ongoing concerns about inflation within the bank’s monetary policy committee, particularly the elevated levels in the crucial services sector, which accounts for about 80 percent of the UK economy. Figures on Wednesday showed that inflation overall in the UK held steady at an annual rate of 2.2 percent last month, still above the bank’s goal.
Minutes of the meeting showed that eight of the nine members of the panel voted to keep rates unchanged, while one backed a quarter-point reduction.
Photo: Reuters
“The economy has been evolving broadly as we expected. If that continues, we should be able to reduce rates gradually over time,” Bank of England Governor Andrew Bailey said.
“However, it’s vital that inflation stays low, so we need to be careful not to cut too fast or by too much,” he said.”
The bank, which last month cut interest rates for the first time since the pandemic, is widely expected to reduce borrowing costs again at its next meeting in November, especially as it will have details of the government’s budget on Oct. 30.
On Wednesday, the Fed cut its main interest by half a percentage point to roughly 4.8 percent from a two-decade high of 5.3 percent, where it had stood for 14 months. It also signaled that there would be more cuts to come in the next few months.
Central banks around the world dramatically increased borrowing costs from near zero during the pandemic when prices started to shoot up, first as a result of supply chain issues and then because of Russia’s full-scale invasion of Ukraine, which pushed up energy costs. As inflation rates have fallen from multi-decade highs recently, they have started cutting interest rates.
Although yesterday’s decision by the UK could be seen as bad news for borrowers, they should get some relief over the coming months, with most economists predicting that the bank would reduce its main rate to about 3.5 percent by the end of next year, with a consequent reduction in the cost of personal loans and mortgage rates.
When an apartment comes up for rent in Germany’s big cities, hundreds of prospective tenants often queue down the street to view it, but the acute shortage of affordable housing is getting scant attention ahead of today’s snap general election. “Housing is one of the main problems for people, but nobody talks about it, nobody takes it seriously,” said Andreas Ibel, president of Build Europe, an association representing housing developers. Migration and the sluggish economy top the list of voters’ concerns, but analysts say housing policy fails to break through as returns on investment take time to register, making the
‘SILVER LINING’: Although the news caused TSMC to fall on the local market, an analyst said that as tariffs are not set to go into effect until April, there is still time for negotiations US President Donald Trump on Tuesday said that he would likely impose tariffs on semiconductor, automobile and pharmaceutical imports of about 25 percent, with an announcement coming as soon as April 2 in a move that would represent a dramatic widening of the US leader’s trade war. “I probably will tell you that on April 2, but it’ll be in the neighborhood of 25 percent,” Trump told reporters at his Mar-a-Lago club when asked about his plan for auto tariffs. Asked about similar levies on pharmaceutical drugs and semiconductors, the president said that “it’ll be 25 percent and higher, and it’ll
NOT TO WORRY: Some people are concerned funds might continue moving out of the country, but the central bank said financial account outflows are not unusual in Taiwan Taiwan’s outbound investments hit a new high last year due to investments made by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and other major manufacturers to boost global expansion, the central bank said on Thursday. The net increase in outbound investments last year reached a record US$21.05 billion, while the net increase in outbound investments by Taiwanese residents reached a record US$31.98 billion, central bank data showed. Chen Fei-wen (陳斐紋), deputy director of the central bank’s Department of Economic Research, said the increase was largely due to TSMC’s efforts to expand production in the US and Japan. Investments by Vanguard International
WARNING SHOT: The US president has threatened to impose 25 percent tariffs on all imported vehicles, and similar or higher duties on pharmaceuticals and semiconductors US President Donald Trump on Wednesday suggested that a trade deal with China was “possible” — a key target in the US leader’s tariffs policy. The US in 2020 had already agreed to “a great trade deal with China” and a new deal was “possible,” Trump said. Trump said he expected Chinese President Xi Jinping (習近平) to visit the US, without giving a timeline for his trip. Trump also said that he was talking to China about TikTok, as the US seeks to broker a sale of the popular app owned by Chinese firm ByteDance Ltd (字節跳動). Trump last week said that he had
RSS