Warned of “great financial uncertainty”
The Bank of England maintained its main interest rate on Thursday, at 4.5%, while warning of a “great financial uncertainty” caused mainly by the duties imposed by US President Donald Trump.
The (central) Bank of England maintained the cost of borrowing at 4.5%, choosing not to decline within seven months, despite the stagnation of British economic growth, as inflation remains high.
On Wednesday, the US Federal Bank and the Bank of Japan maintained the cost of borrowing, while on Thursday the Central Bank of Switzerland reduced interest rates.
“There is a great deal of financial uncertainty right now,” said England Bank Governor Andrew Bailey.
The bank said in the minutes of its session that “the uncertainty in global trade policy has intensified.”
“Other geopolitical uncertainties have also increased and the volatility indicators of financial markets have increased worldwide,” he notes.
“The German government has announced plans for a significant reform of its budgetary rules,” the Central Bank also said.
In addition, Mr Bailey reports that the Bank of England still believes that “interest rates are on a gradual downward trend”.
Analysts estimate that this indicates, as expected, that the bank would reduce its next regular monetary policy session next May.
Thursday’s official figures showed that while British unemployment stabilized early in the year, wage increases remains well above annual inflation.
At the same time, the consumer price index increased more than expected to 3.0% in January, which is over 2% of the Bank of England.
Meanwhile, the British economy has shrunk unexpectedly in January.
“We had three interest rate cuts from summer, but there is still a job to do to lighten the costs of living,” Finance Minister Rachel Rakes said, reacting to the last decision of the Bank of England.
The bank’s decision was supported by eight of the nine policy -makers of the Monetary Policy Policy Policy, including Mr Bailey.
Source: KYPE