"The Bank of England has pushed a big red pause button on interest rate cuts as caution remains the name of the game and policymakers assess flickering growth and stubborn inflation. Although the signs are that the price spiral will be dampened down in the coming months, they've judged that it's still too early to move, especially given signs that growth in the economy is showing tentative signs of making a comeback. The latest PMI snapshot showed activity accelerating with Budget blues being cast aside."
"Plus, with headline inflation ramping up at the last count, and wage growth still uncomfortable, it's not a clement environment for interest rate cuts. Still, it was a closer call than expected, and it puts a cut in March still very much in the picture. The labour market is showing weakness, Budget changes are set to bring down energy and transport costs and a wave of cheaper Chinese goods are heading this way."
The Bank of England voted 5–4 to keep the base interest rate at 3.75%. January registered a growth spurt while inflation remains stubborn and wage growth is a concern. Policymakers expect more cuts later in the year due to labour market weakness, but the timing has slipped back. The narrow voting split keeps a March cut possible. Budget measures, falling energy and transport costs, and a wave of cheaper Chinese goods could shift votes toward cuts. Ongoing geopolitical tensions, erratic US trade policy, and a tech sell-off are increasing uncertainty and delaying decisive easing.
Read at London Business News | Londonlovesbusiness.com
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