The Bank of England’s interest rate-setters voted to keep borrowing costs at their 16-year high of 5.25 per cent on Thursday as two officials who had previously called for higher rates changed their stance.
But both Jonathan Haskel and Catherine Mann joined the majority in favour of no change. Swati Dhingra again cast the lone vote to cut Bank Rate to 5.0 per cent.Governor Andrew Bailey said there had been “further encouraging signs that inflation is coming down” but he also said the BoE needed more certainty that price pressures in the economy were fully under control.
The European Central Bank has tried to cool talk about a run of rate cuts for the euro zone that has gathered steam as investors increasingly consider the fight against global inflation to have been won. The BoE said it now expected inflation would drop below its 2 per cent target in the second quarter due to the impact of finance minister Jeremy Hunt’s decision this month to freeze fuel duty once again.
But financial markets earlier on Thursday were putting a nearly 70 per cent chance on first cut in June with almost three quarter-point reductions priced in over 2024.Britain’s minimum wage will rise by nearly 10 per cent next month, and retailers that often pay staff only slightly more have raised salaries ahead of the increase.
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