Bank of England picture in December 2024.
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LONDON – The Bank of England ended its last meeting of the year on Thursday with a decision to leave interest rates unchanged, after UK inflation rose to an eight-month high.
Analysts had been expecting a rate hike at the December meeting, as policymakers remain concerned services stubborn inflation and wage growth.
The BOE has already taken its main rate from 5.25% to 4.75% this year in two quarter-percentage-point moves.
In a departure from expectations, three members of the Monetary Policy Committee voted to cut rates, while six voted to hold. Economists polled by Reuters had predicted that only one member would vote to cut.
Sterling made gains against the US dollar immediately after the BOE announcement, trading 0.2% higher at 12:22 pm The greenback he organized an extensive gathering Wednesday after the US Federal Reserve cut interest rates by a quarter point but pointed to a more bleak outlook for 2025. He offered some gains Thursday morning.
GBP/USD.
In a statement, the BOE said the rise in UK headline inflation in November to 2.6% was slightly higher than previously expected, saying services inflation remained “elevated”.
BOE staff also downgraded their economic forecast for the fourth quarter of 2024, now predicting no growth, compared to the 0.3% expansion expected in their report in the Samhain
UK growth figures have come in weaker than expected in recent months, with the economy posting a surprise 0.1% contraction in October.
Money markets this week stopped betting on the pace of more trims next year after the release of data on inflation and summer wage growth, and are now pricing in about 50 basis points of cuts that are to come, down from a perspective of about 70 basis points. value of Monday's cuts.
“The split vote decision and the gloomy tone of the minutes suggest that a February interest rate cut is still very much on the cards, if not yet done,” said Suren Thiru, director of economics at the People's Institute. -Registered accounts of England and Wales in comments by email.
“There is a risk that the Bank of England will back itself into a corner on the pace of policy easing because, with inflation likely to move higher, the timing of future interest rate cuts could become more complicated, especially if the fear of stagf comes true.”
This is new news and will be updated soon.
