theguardian.com
Bank of England Cuts Rates Amid Budgetary Inflation Concerns
The Bank of England cuts interest rates despite concerns about the government's budget adding to inflationary pressures.
English
United Kingdom
EconomyLabour MarketUkInflationGovernmentInterest RatesBudget
Bank Of EnglandOfgem
Rachel ReevesAndrew BaileyCatherine MannLiz TrussDonald Trump
- Why did the Bank of England cut interest rates?
- The Bank of England cut interest rates from 5% to 4.75% to alleviate pressure on households and businesses from high borrowing costs, despite concerns that the government's budget will prolong high inflation.
- What was the market's expectation of the Bank of England's decision?
- The Bank's decision was largely anticipated by financial markets and reflects a balance between easing economic hardship and maintaining control over inflation.
- What is the Bank of England's outlook on future interest rate changes?
- Despite the rate cut, Governor Andrew Bailey cautioned against expecting rapid further reductions, emphasizing the need to keep inflation close to the target and suggesting gradual rate decreases in the future.
- What is the Bank of England's prediction for inflation in the coming years?
- While the Bank expects inflation to peak around 2.75% mid-next year, it anticipates inflation remaining above the target until 2027, a year longer than previously projected.
- How will the UK government's budget impact inflation, according to the Bank of England?
- The government's budget, involving £70 billion in spending, is expected to increase inflation by approximately 0.5 percentage points and boost GDP by 0.75%, according to the Bank of England.