Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Fall in inflation to 6.7% leaves interest rate decision in balance

by September 21, 2023
September 21, 2023
Fall in inflation to 6.7% leaves interest rate decision in balance

The Bank of England’s decision on whether to push ahead with another interest rate rise today or hit pause was on a knife-edge after a cooldown in inflation in August surprised the City.

Expectation that the monetary policy committee (MPC) would impose another 25 basis-point rise, lifting the base rate to a 15-year high of 5.5 per cent, fell from a near-certainty to odds of 50-50 within minutes of yesterday’s unexpected data from the Office for National Statistics (ONS).

Goldman Sachs, Deutsche Bank and Nomura all changed their calls to predict a hold at 5.25 per cent. The yield on two-year UK government bonds fell to a three-month low of 4.83 per cent and sterling weakened against the dollar, before stabilising at $1.24.

The shift in sentiment came after ONS data suggested that annual inflation slipped to 6.7 per cent in August, down from July’s 6.8 per cent. Analysts and the Bank of England’s forecasters had forecast a rise to about 7 per cent.

Measures of underlying inflation also fell sharply. Core inflation, which strips out volatile food and energy prices and is monitored closely by the MPC, dropped to 6.2 per cent from 6.9 per cent, way below Bank projections.

Today’s interest rate decision had been billed as the toughest to call since December 2021, when the Bank embarked on the most aggressive run of rate rises in more than three decades.

Data since the MPC’s last meeting in August has been mixed. Growth has reversed while unemployment has accelerated faster than predicted, suggesting that aggressive tightening is feeding through into the real economy.

On the flip side, private sector wages, which indicate that inflation is becoming embedded into the economy, rose by more than 8 per cent in the three months to July. Consumer price inflation is still running well in excess of three times the Bank’s 2 per cent target.

Goldman’s team said: “Combined with their recent dovish commentary, we now expect the MPC to keep the Bank rate unchanged.”

Read more:
Fall in inflation to 6.7% leaves interest rate decision in balance

0
FacebookTwitterGoogle +Pinterest
previous post
Ramaswamy unveils plan to ‘declare economic independence from China’ in upcoming policy speech
next post
Inheritance Tax Receipts reach £3.2Bn from April to August 2023, up £300M from same period year earlier

You may also like

South East overtaken in race for regional investment

June 19, 2023

Change the Race Ratio finalises plans for independence...

August 21, 2023

Deliveroo pledges £200,000 in apprenticeship funding to empower...

November 1, 2023

Book Bodega of Ramsgate turns new page with...

February 28, 2023

P&O Ferries owner reports record-breaking profits after mass...

August 19, 2022

Borrowing rises less rapidly than expected despite energy...

November 23, 2022

Business Best Practice: Preparing for AI Regulation

March 7, 2024

FCA says motor finance compensation ruling ‘goes too...

April 1, 2025

8 Ways To Improve Website Security

September 5, 2022

Unlocking Success: 5 Key Strategies to Develop EI...

December 5, 2024

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Rescissions: A Small but Welcome Step Toward Spending Discipline

      June 5, 2025
    • DAVID MARCUS: Why Navy ships should not be named for gay rights icons

      June 5, 2025
    • GREGG JARRETT: Biden, the ‘marionette president; and the case of the runaway autopen

      June 5, 2025
    • Trump Practically Bans Travel and Immigration from 12 Countries with Flimsy Security Justifications

      June 5, 2025
    • ‘He’s not a big factor’: Trump’s Senate allies dismiss Elon Musk’s calls to ‘kill the bill’

      June 5, 2025
    • Fears grow that Tata Steel could be excluded from Starmer-Trump trade deal

      June 5, 2025

    Categories

    • Business (8,147)
    • Investing (2,008)
    • Politics (15,523)
    • Stocks (3,127)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved