Bank of England Holds Steady: Inflation Outpaces Growth
The Bank of England is expected to keep interest rates unchanged at 4.75%. Despite inflation rising to 2.6%, the British economy is stagnant. Persistent inflation and tight labor market conditions suggest that interest rates will not decrease soon, disappointing many sectors in a slow-growth economy.
- Country:
- United Kingdom
The Bank of England is expected to maintain its key interest rate at 4.75% as inflation in the UK has surpassed its target. Despite the British economy's stagnation, the Monetary Policy Committee is cautious about rate cuts due to persistent inflationary pressures.
Economists predict sustained inflation in the services sector and strong wage growth, making it unlikely for rates to decrease soon. This holds true for the US Federal Reserve's expectations as well, reflecting a global trend of cautious monetary easing.
Critics blame the recent budget by the new Labour government for heightening inflation while hindering growth with increased business taxes. Nevertheless, inflation rates remain significantly lower than during the peak pandemic-related price spikes driven by supply chain disruptions and geopolitical tensions.
(With inputs from agencies.)
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