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Bank of England Holds Steady Amid Inflation Concerns
2024-12-19 17:55:10
Economy
Finance
Inflation

Bank of England Holds Steady Amid Inflation Concerns

The Bank of England has decided to maintain its interest rate at 4.75%, reflecting a cautious stance amid rising inflation concerns. With inflation climbing to 2.6% in November, surpassing the Bank’s target, monetary policymakers are wary of making any changes.

Andrew Bailey, the Governor of the Bank, remains a pivotal figure in these deliberations, known for his careful approach to monetary policy. This decision comes as a response to increased inflation driven by wage growth and high service prices, which pose challenges to economic stability.

Despite economic slowdown fears, a significant majority within the Monetary Policy Committee prioritized tackling inflation over rate cuts. The Bank’s decision aligns with a broader global trend of central banks exercising caution, as seen with the recent Federal Reserve rate cut accompanied by a slower path for future reductions.

This prudent approach underscores the Bank of England's commitment to stabilizing the economy while navigating complex fiscal challenges.

Related news on that topic:

Fed's Cautious Approach Amid Interest Rate Cuts

The US Federal Reserve has made its third consecutive interest rate cut, reducing rates by 0.25 percentage points to a range of 4.25-4.50%. This decision, while aimed at supporting economic growth amidst rising inflation, reflects a cautious stance towards future rate adjustments. Despite the ongoing economic expansion and robust labor market, inflation remains above the Fed's 2% target, causing concern and influencing a slower pace of future rate cuts. Fed Chair Jerome Powell emphasized the gradual approach in response to persistent inflationary pressures and uncertainties surrounding economic policies. The recent rate cut was not unanimously supported, with Cleveland Fed President Beth Hammack dissenting, preferring to keep rates unchanged. This highlights the internal debate within the Fed regarding the balance between fostering employment and controlling inflation. The US economy has shown resilience, with a solid growth trajectory and low unemployment rates, giving the Fed some leeway in maintaining high interest rates. However, the specter of President-elect Donald Trump's policies, including proposed tariffs and immigration plans, looms large, potentially exacerbating inflation and complicating monetary policy. Looking ahead, the Fed projects only two rate cuts in 2025, with inflation expected to stabilize at 2.5%. The central bank's cautious approach underscores the delicate balancing act required in navigating economic growth and inflation control amidst political and economic uncertainties. The evolving economic landscape suggests that while the Fed remains committed to its inflation targets, the path to achieving them may be fraught with challenges.

Inflation Trends and Policy Responses Across Europe

Recent inflation reports from various European countries reveal a complex economic landscape. Eurostat has slightly revised down its November inflation estimate for the Eurozone to 2.2%, a decrease of 0.1 percentage points. This figure remains above the European Central Bank's target of 2.0%. Over the past two months, inflation has risen again, primarily driven by higher prices for services, food, alcohol, and tobacco, while energy costs have continued to decline. In response, the ECB has implemented another interest rate cut, marking the fourth reduction this year to stimulate the weakening economy. In the UK, inflation has surged to an eight-month high of 2.6%, largely due to rising costs in fuel, groceries, and tobacco, alongside a notable drop in airfares. Core inflation has also increased, raising concerns among policymakers. The Bank of England faces pressure as GDP unexpectedly fell by 0.1% in October and employment levels declined. Despite these challenges, the Bank has cut rates, though there are increasing calls to maintain them amidst rising inflation. Austria's inflation rate held steady at 1.9% in November, reflecting a slight increase from October. In contrast, the UK’s inflation data poses significant challenges for the Labour Party’s economic goals, as rising costs may hinder growth that translates directly to households. Overall, these trends underline the ongoing economic pressures across Europe and the delicate balancing act faced by central banks in managing inflation while fostering growth.

Read 5 more recent news on this topic

The press radar on this topic:

The Guardian
19. Dezember 2024 um 15:13

Bank of England expected to leave interest rates on hold today; household water bills to rise 36% by 2030 – business live

Economy
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Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. Borrowers are unlikely to receive a pre-Christmas present from the Bank of England today. The UK central bank is widely expected to leave interest rates on hold at noon, at its final meeting of 2024. According to the money markets, there is barely 1% chance of a cut, and almost 99% certainty that we’ll get a ‘no change’ decision as the clocks strike 12. That would leave UK interest rates..
The Guardian
19. Dezember 2024 um 16:35

Inflation fears trump growth concerns among Bank of England’s MPC members

Economy
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Bank holds rates 4.75%; MPC split 6-3 with majority citing inflation risks from wage growth over 5%, rising prices, and labor market constraints, while minority worry about economic slowdown after Labour's budget and advocate rate cuts; some see recent wage rises as workers recouping losses, but also note higher savings rate and threat of tax hikes may curb spending, with predictions of zero growth in Q4 and risk of recession unless decisive action taken.
fxstreet
19. Dezember 2024 um 08:15

BoE expected to stand pat, highlighting gradual approach toward lowering interest rate

Economy
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Andrew Bailey, the current Governor of the Bank of England, is expected to play a key role in the central bank's decision-making process. Bailey, who previously served as the Deputy Governor and Chief Cashier of the BoE, is known for his cautious approach to monetary policy. Investors will closely monitor his comments and the Monetary Policy Report for insights into the BoE's future policy direction.
EuroNews
19. Dezember 2024 um 12:06

Bank of England takes final interest rate decision of 2024

Economy
Finance
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The Bank of England maintained its 4.75% rate, with 3 MPC members preferring a 0.25 point cut. CPI inflation rose to 2.6% in November from 1.7% in September, driven by core goods, food, and elevated services prices. The Bank will meet in February to update forecasts for Britain's economy.
EuroNews
19. Dezember 2024 um 12:46

Die Bank von England hält den Zinssatz in ihrer letzten Sitzung des Jahres stabil

Wirtschaft
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Der geldpolitische Ausschuss (MPC) der Bank von England hat den Leitzins in seiner letzten Sitzung des Jahres bei 4,75% belassen. Dies wurde aufgrund der Inflation und der Lohnsteigerungen beschlossen. Der Gouverneur der Bank, Andrew Bailey, hatte zuvor erklärt, dass er weitere Zinssenkungen erwarte und diese schrittweise erfolgen würden. Laut dem Statistikamt stieg die Verbraucherpreisinflation bis November um jährlich 2,6%. Während der COVID-19-Pandemie hatten die Zentralbanken die Kreditkos..
CW

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