The Bank of England is expected to hold interest rates steady after a reduction to 4.25% in early May. Analysts predict deeper cuts may be necessary later this year as inflation remains above the target level, with May's inflation rate recorded at 3.4%. Despite efforts to stimulate growth through lower rates, the UK's economy shrank unexpectedly in April due to rising taxes and decreased exports. The Bank must consider both domestic pressures and international factors, such as geopolitical tensions and tariffs, that could further influence inflation and economic recovery.
The Bank of England is expected to keep interest rates on hold, with analysts believing rate cuts will come later in the year due to persistent inflation.
UK economic growth has remained sluggish, with a surprising contraction of 0.3% in April impacted by rising taxes, household bills, and plummeting exports.
Inflation remained elevated in May, at 3.4%, driven by rising food prices, putting further strain on household budgets amidst ongoing economic uncertainty.
Policymakers are weighing global factors, such as Middle East tensions and US tariffs, which could influence oil prices and, consequently, overall inflation.
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