UK Inflation Rises to 2.3%, Increasing Pressure to Delay Interest Rate Cut

THE GUARDIAN: Figure is above Bank of England target after energy bills push up prices

Inflation increased to 2.3% in October, heaping pressure on the Bank of England to delay further interest rate cuts until next year.

Figures released by the Office for National Statistics (ONS) on Wednesday showed that a rise in energy bills pushed up the consumer prices index (CPI), reversing a downward trend this year in inflation, which was 1.7% in September.

The figure for the year to October was slightly above the 2.2% City economists had expected. » | Phillip Inman | Wednesday, November 20, 2024

THE TELEGRAPH: Interest rates to ‘stay higher for longer’ after inflation blow: Interest rates risk staying “elevated for longer”, economists have warned, after inflation rose at a faster pace than expected last month. / Policymakers are “unlikely” to cut borrowing costs at its meeting in December, analysts said, after the pace of price rises surged back above the Bank of England’s 2pc target in October. »

Inside Russia: Russia’s Central Bank Has Put Up the Interest Rate to 21%

Anyone’s savings would grow quickly with a rate like that! Read on and comment.
REUTERS: Russia's Nabiullina on raising rates to 21% »

Bank of England Cuts Interest Rates to 5% in Narrow Vote

THE GUARDIAN: Reduction is first since March 2020 as governor says inflationary pressures have ‘eased enough’ to enable cut

The Bank of England has cut interest rates for the first time since the start of the Covid pandemic, moving to ease the pressure on households after ratcheting up borrowing costs to combat the worst inflation shock in four decades.

In a finely balanced decision after holding borrowing costs at the highest level since the 2008 financial crisis for a year, the Bank’s monetary policy committee (MPC) voted by a narrow majority to cut its base rate by a quarter of a percentage point to 5%.

Exposing divisions within the central bank’s most senior ranks over the timing of a cut, the MPC was split by five votes to four, with the governor, Andrew Bailey, casting the deciding vote for the first reduction in borrowing costs since March 2020. » | Richard Partington, Economics correspondent | Thursday, August 1, 2024

Don’t be fooled by the interest rate cut – higher rates are here to stay: Mortgage payers and business owners vainly hope cut to 5% signals return to pre-pandemic era of cheap borrowing »

Bank of England Set to Rain on Hopes of Interest Rate Cut after Economic Bounce

THE GUARDIAN: This week’s Bank meeting is unlikely to bring borrowers any joy amid a strong recovery from 2023’s mild recession

Savers are always on the lookout for the best interest rates and the UK seems like a good bet at the moment. In recent months, the pound has climbed in value against the euro and the dollar as economists speculate that UK interest rates will remain at 5.25% for longer than previously expected.

While the odds of a cut in borrowing have shortened, with a narrow majority of City analysts expecting a reduction, few outside the Square Mile believe a change is imminent. » | Phillip Inman | Sunday, July 28, 2024

Daniel Lacalle: Don’t Expect Large Rate Cuts... with This Inflation

Dec 14, 2023

Daniel Lacalle’s website here in English and here in Spanish.

IMF Says UK Faces Five More Years of High Interest Rates

BBC: The UK faces another five years of high interest rates to stem rising prices, an influential global group has warned.

The International Monetary Fund expects the UK to have the highest inflation and slowest growth next year of any G7 economy including the US, France, Germany, Canada, Italy and Japan.

However, the Treasury said recent revisions to UK growth had not been factored in to the IMF's report.

The outlook was drawn up before this weekend's developments in Israel. » | Lucy Hooker & Faisal Islam, BBC News | Tuesday, October 10, 2023

Fed Raises Rates after a Pause and Leaves Door Open to More

THE NEW YORK TIMES: Federal Reserve officials raised interest rates to their highest level in 22 years, continuing their 16-month-long campaign to wrestle inflation lower by cooling the American economy.

Officials pushed rates to a range of 5.25 to 5.5 percent, their highest level since 2001, while leaving the door open to further rate increases in the statement announcing their unanimous decision. Jerome H. Powell, the Fed chair, is speaking [in the accompanying video] to journalists to explain the move — and, potentially, to offer some hint at how the central bank is thinking about its next step. (+ video) » | Jeanna Smialek | Wednesday, July 26, 2023

Turkish Central Bank Raises Interest Rates to 15% after Two-year Freeze

THE GUARDIAN: Experts say increase from 8.5% may be insufficient to tackling surging inflation that some estimate at 110%

Turkey’s central bank has raised interest rates for the first time in more than two years, from 8.5% to 15%, but there is widespread concern that the move is insufficient to combat rising inflation and an ongoing economic crisis.

The decision marks a partial shift in the unorthodox economic policy of the president, Recep Tayyip Erdoğan, under which interest rates have been frozen since March 2021 despite a sharp devaluation in the Turkish lira.

The central bank’s monetary policy committee said it had raised rates “to begin the monetary tightening process in order to establish the disinflation course as soon as possible, to anchor inflation expectations, and to control the deterioration in pricing behaviour.”

Inflation has risen to levels that are proving unbearable for large sections of the population, causing a widespread cost of living crisis. Officially, inflation in Turkey is at 39.59%, although unofficial estimates from Turkey’s independent Inflation Research Group put it at 110%. » | Ruth Michaelson | Thursday, June 22, 2023

Bank of England Raises Interest Rates by a Half Point to 5%

THE GUARDIAN: Move brings borrowing costs to highest level since April 2008 as Bank intensifies efforts to control inflation

The Bank of England has raised interest rates by a half point to 5% as it intensifies its efforts to tackle stubbornly high inflation, adding to the strain on households struggling with soaring mortgage costs.

In what will be seen as a major move, the Bank’s monetary policy committee increased rates for the 13th consecutive time to the highest level since April 2008. Before the decision was announced, financial markets were evenly split on whether the Bank would vote for a half-point rise or a smaller quarter-point increase. » | Richard Partington, Economics correspondent | Thursday, June 22, 2023

Markets predict 6% UK interest rate by end of year: Rates will remain at level until summer 2024 after Bank of England hikes benchmark rate by half a percentage point »

UK Prepares for Recession amid Rising Interest Rates

May 26, 2023 | Owning a home is getting more expensive as lenders begin putting up mortgage rates, spooked by stubbornly high inflation figures.

Hunt Will Back More Interest Rate Rises Even If It Pushes UK [in]to Recession

THE GUARDIAN: Chancellor to support Bank of England’s decisions because ‘inflation is a source of instability’

Jeremy Hunt said he will back further interest rate rises by the Bank of England, even if it risks plunging the UK into recession, in order to combat soaring inflation.

The chancellor’s comments come after figures this week showed annual inflation in April was higher than expected at 8.7%, raising the prospect of a 13th interest rate rise by the Bank of England. Markets are now predicting that interest rates could climb to 5.5% by the end of the year, up from their current level of 4.5%, putting further pressure on borrowers and the housing market. » | Kalyeena Makortoff | Friday, May 26, 2023

Bank of England Raises UK Interest Rates to 4.5%

THE GUARDIAN: Latest 0.25 point hike marks 12th rise in a row as Bank battles stubbornly high inflation

The Bank of England has raised interest rates by a quarter of a percentage point to 4.5% amid growing concerns about persistently high inflation in the UK.

The Bank’s monetary policy committee voted by a majority for a 12th successive increase in borrowing costs, continuing its most aggressive rate-hiking cycle since the 1980s in an attempt to dampen UK inflation which remains in double digits.

UK rates are at the highest level since October 2008, when the global economy was in the grips of the financial crisis. » | Richard Partington | Thursday, May 11, 2023

Bank of England Poised to Raise Borrowing Costs to Combat Inflation

THE GUARDIAN: Financial markets expect 0.5 percentage point increase as fears mount that UK is about to enter long recession

The Bank of England is poised to increase the cost of borrowing for households and businesses at its interest meeting today, as fears mount that the UK economy is about to enter a long recession.

Financial markets expect a 0.5 percentage point increase in the central bank’s base rate to 3.5% as the monetary policy committee seeks to combat inflation.

The consumer prices index (CPI) fell back from 11.1% in October to 10.7% last month, according to data released Wednesday, mainly from weaker increases in petrol, clothing and food, but remains well above the BoE’s 2% target.

Jeremy Hunt has indicated he will welcome a tough stance on rates by officials at Threadneedle Street after he said bringing down inflation was his main mission. » | Phillip Inman | Wednesday, December 14, 2022

Bank of England Hikes Interest Rates to 3% in Biggest Rise since 1989

THE GUARDIAN: Bank fears 0.75 percentage point rise may push UK economy into longer and deeper recession than the 1930s

The Bank of England has increased the cost of borrowing by 0.75 percentage points to 3%, despite predicting that higher interest rates would push the economy into the longest recession since the 1930s.

In a split vote, the central bank’s monetary policy committee (MPC) voted by a 7-2 majority for the biggest increase in rates since 1989 to combat an inflation rate that hit 10.1% in September.

The Bank blamed higher energy prices and a tight labour market for the decision to increase interest rates, matching rises in the last week by the US Federal Reserve and the European Central Bank. » | Phillip Inman | Thursday, November 3, 2022

Bank of England warns of longest recession since the 1930s: Interest rate rise to 3% is biggest since 1989 and fears UK economy may go into longer, deeper recession »

Mini-budget Will Likely Mean Higher Interest Rates, Warns Bank of England Governor

THE GUARDIAN: Andrew Bailey says UK borrowers can expect to feel impact of Truss government’s tax and spending decisions

Governor of the Bank of England, Andrew Bailey, says extra stimulus in last month’s mini-budget would force the Bank into tougher-than-expected action. Photograph: Drew Angerer/Getty Images
UK borrowers can expect to face higher interest rates as a result of the Truss government’s tax and spending decisions during its six weeks in power, the governor of the Bank of England has warned.

Despite the U-turn on corporation tax on Friday that saw the sacking of Kwasi Kwarteng as chancellor, Andrew Bailey said the extra stimulus provided in last month’s mini-budget would add to inflation and force the Bank into tougher-than-expected action.

Bailey said he had impressed on the new chancellor, Jeremy Hunt, the need for the public finances to be sustainable and that there had been a “clear and immediate meeting of minds”. Hunt used his first interview to stress mistakes made by Truss would require “difficult decisions” to be made. » | Larry Elliott | Saturday, October 15, 2022

Daniel Lacalle: Rate Hikes Will Continue as Inflation Remains

Oct 14, 2022

Global Fallout from Rate Moves Won’t Stop the Fed

THE NEW YORK TIMES: The Federal Reserve, like many central banks, sets policy with an eye on the domestic economy. Its battle to control prices is causing pain abroad.

The Federal Reserve has embarked on an aggressive campaign to raise interest rates as it tries to tame the most rapid inflation in decades, an effort the central bank sees as necessary to restore price stability in the United States.

But what the Fed does at home reverberates across the globe, and its actions are raising the risks of a global recession while causing economic and financial pain in many developing countries.

Other central banks in advanced economies, from Australia to the eurozone, are also lifting rates rapidly to fight their inflation. And as the Fed’s higher interest rates attract money to the United States — pumping up the value of the dollar — emerging-market economies are being forced to raise their own borrowing costs to try to stabilize their currencies to the extent possible.

Altogether, it is a worldwide push toward more expensive money unlike anything seen before in the 21st century, one that is likely to have serious ramifications. » | Jeanna Smialek and Alan Rappeport | Friday, October 7, 2022

Kwarteng’s Tax Cuts Will Force ‘Significant’ Interest Rate Rises by Bank of England

THE GUARDIAN: Chief economist says mini-budget will increase inflationary pressure in remarks likely to further spook mortgage borrowers

The Bank of England’s chief economist, Huw Pill, says: ‘It is hard not to draw the conclusion that this [tax cuts] will require a significant monetary policy response.’ Photograph: Bloomberg/Getty Images
A senior Bank of England official has warned “significant” increases in interest rates will have to be imposed by the central bank in response to tax cuts put forward by Kwasi Kwarteng in his mini-budget.

The Bank’s chief economist, Huw Pill, said the chancellor’s planned tax cuts would act as a stimulus and increase inflationary pressures, with the result that interest rates would need to go higher than previously forecast.

“In my view, a combination of the fiscal announcements we have seen will act a stimulus to demand in the economy,” he said. “It is hard not to draw the conclusion that this will require a significant monetary policy response.”

Pill’s remarks are likely to further spook homebuyers and mortgage borrowers near the end of a fixed-rate mortgage about the cost of financing their loans. » | Phillip Inman | Tuesday, September 27, 2022

UK’s cost of borrowing on international markets overtakes Greece and Italy: Five-year British government bonds fall dramatically as traders price in higher risk of default on debt »

Pound Comes under New Pressure after Bank of England Fails to Raise Rates

THE GUARDIAN: Central bank stops short of emergency rate hike and instead says it will make full assessment in November

The Bank of England issued a statement in response the pound’s sharp fall on currency markets.Photograph: James Veysey/Rex/Shutterstock
The government was struggling to prevent a full-scale loss of financial market confidence in its economic strategy on Monday evening after the Bank of England’s decision to rule out an emergency rise in interest rates prompted fresh selling of the pound.

Attempts by Threadneedle Street and the Treasury failed to repair the damage caused by Kwasi Kwarteng’s mini-budget last Friday, with sterling falling to a record low against the US dollar.

Within minutes of the Bank saying that it intended to wait until November before responding to the recent turbulence, the pound had dropped two cents against the dollar and was within three cents of the record low of $1.03 hit in Far East trading overnight. » | Larry Elliott, Economics editor and Rowena Mason, Deputy political editor | Monday, September 26, 2022

Markets warn sterling slump could lead UK interest rates to triple by next year: Analysts expect Bank of England to convene meeting to raise rates with further increase in November »

Isn’t this Governor being rather lily-livered? – © Mark Alexander

UK Bonds Slump after Pound Plunges to Record Low against Dollar – Business Live

THE GUARDIAN: Economists suggest Bank of England may need an emergency interest rate hike, as gilts slide and sterling slumps to a record low against the US dollar

Speculation of an emergency Bank of England rate hike is giving the pound some support, agrees Matthew Ryan, head of market strategy at global financial services firm Ebury » | Graeme Wearden | Monday, September 26, 2022

Pound hits all-time low against dollar after mini-budget rocks markets: Odds of sterling hitting parity with dollar jump, as analysts say UK bond market ‘getting smoked’ by giveaway »