"In a move that comes as no surprise, the Bank of England's Monetary Policy Committee (MPC) has voted to keep interest rates unchanged at 4%. The decision reflects the MPC's concern that inflation, which held steady at 3.8% in August, remains too far above the 2% target to justify an early easing. Persistent wage growth and services inflation are the key reasons for this cautious stance, with underlying price pressures proving slow to unwind."
"The Bank of England is prioritising stability over speed. By holding interest rates, the Bank is sending a clear message that it will not throw caution to the wind in looking to support economic recovery if it risks causing inflation to soar. The Bank will want to see several months of softer pay and prices before cutting. Wage growth has begun to cool - wage growth (excluding bonuses) is now at 4.8%, its slowest since May 2022."
Bank of England's Monetary Policy Committee held interest rates at 4% because inflation remains at 3.8%, well above the 2% target. Persistent wage growth and services inflation maintain underlying price pressures that are slow to unwind. The Bank prioritises stability over speed and will wait for several months of softer pay and prices before cutting rates. Wage growth excluding bonuses has cooled to 4.8%, the slowest since May 2022. If the cooling continues, one further rate cut is likely before year-end. The Chancellor faces constrained fiscal options amid a sluggish economy, lower productivity forecasts, and tighter fiscal headroom.
Read at London Business News | Londonlovesbusiness.com
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