"The Monetary Policy Committee (MPC) has chosen to keep interest rates at 4%, maintaining its firm and cautious stance as inflation remains well above the 2% target. Given that inflation has held at 3.8% for three consecutive months and underlying domestic pressures - particularly in wages and services - have yet to ease decisively, this is a wise decision from the MPC."
"However, should headline inflation begin to cool ahead of the MPC's meeting on 18th December, there's a chance that the gift of an interest rate cut could be placed under the tree just in time for Christmas. The broader economy shows little momentum. Growth is flat, business investment is subdued, and household confidence remains weak after an extended period of high borrowing costs and limited real wage growth."
"Attention now shifts to the Autumn Budget, which is set to play a crucial role in shaping the near-term outlook. With monetary policy effectively on hold, the government faces calls to use fiscal policy to stimulate growth, attract investment, and support productivity, while avoiding measures that could reignite inflation or undermine market confidence. UK gilts now sit at one of their lowest levels this year, and the Chancellor will be keen to maintain this."
The Monetary Policy Committee has maintained the Bank Rate at 4% while inflation remains around 3.8% for three months and above the 2% target. Underlying domestic inflation pressures, especially in wages and services, have shown little easing. Policymakers remain cautious about loosening policy prematurely to avoid reigniting inflation. A rate cut could be possible if headline inflation cools before the 18th December meeting. The broader economy displays flat growth, subdued business investment, and weak household confidence after prolonged high borrowing costs and stagnant real wages. The Autumn Budget will influence near-term prospects and fiscal policy may need to support growth without undermining price stability.
Read at London Business News | Londonlovesbusiness.com
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