cross-posted from: https://fedinews.net/m/ImproveTheNews/t/4654
- The Bank of England (BoE) has decided to hold interest rates at 5.25% — its highest level in 15 years — as it warned that the UK economy was unlikely to see growth until 2025. BBC News
- The BoE's Monetary Policy Committee 6-3 decision is its second pause in a row after 14 consecutive rate hikes. In September, the bank voted 5-4 for its first rate halt since December 2021. Evening Standard
- In a statement following the decision, the MPC claimed that it would be "watching closely" to see if further rate increases were needed, also commenting that it was "much too early" to consider rate cuts. All three committee members who did not vote for a rate pause were in favor of a quarter-point rate increase to 5.5%. Independent (LR: 2 CP: 3)
- The BoE also estimated that UK inflation was to drop below 5% in October — with last month's data to be released at the end of November. BoE Governor Andrew Bailey claimed that "Higher interest rates are working and inflation is falling." Sky News
- Despite this, Bailey affirmed that there was "absolutely no room for complacency." Inflation's annual rate stood at 6.7% in the year to September, with the central bank claiming monetary policy would have to remain "sufficiently restrictive for sufficiently long" to hit its 2% target. CNBC
- The BoE's 2% target is forecasted to be reached at the end of 2025 — 6 months later than previously estimated. The decision by the BoE follows recent decisions both by the European Central Bank and the US Federal Reserve to also hold interest rates. Reuters (LR: 3 CP: 5)
Pro-establishment narrative:
- Decisions by the BoE will likely continue to be hard-fought within its committee as the central bank walks a tightrope between tackling inflation and avoiding a recession. So far, the UK has avoided the doomsday predictions for its economy, but challenges inevitably remain as estimates for targeted inflation levels remain deep into 2025.
Spectator (UK) (LR: 5 CP: 5)Establishment-critical narrative:
- With growth slowing and unemployment rising, the decision to keep interest rates at their current level is a further signal of the UK government's stagnant and ineffective policymaking. The BoE lacks transparency over inflation modeling and its long-term plan, as job outlooks and quality of life continue to suffer.
Morning StarNerd narrative:
- There's a 50% chance that the UK's annual inflation rate for 2023 will be at least 6.99%, according to the Metaculus prediction community.
Metaculus (LR: 3 CP: 3)