Bank of England MPC Member Suggests Rate Freeze August 1st

A report on the BBC has today led with a story that Jonathan Haskel, a member of the Bank of England’s Monetary Policy Committee has suggested he “would rather hold rates” until inflation has “subsided sustainably”.

Bank of England central base rates are currently at 5.25% and been held at that rate since August 2023.

Inflation is down to the Bank of England’s target at 2.0% pa but there is still upward pressure with alcohol and tobacco, housing costs, health, communication and recreation costs still increasing bwteeen 4.1% - 7.8% pa, so there is still upward pressure as UK unemployment is only increasing marginally meaning employment levels are still high.  In addition, average weekly earnings were still up around 5.5% pa and real earnings adjusted for inflation were still up 2.2% pa in the last Office for National Statistics report.

This means, despite continued higher costs for housing, alcohol and recreation, people have more money in their pockets.

Comment

We tend to agree with Mr Haskel in that inflation, whilst down still has upward pressure and is not a sustainable fall just yet.  We have suggested for some time that rates will not fall until Autumn although maany are now speculating a September cut bot in the US and UK.  Mr Haskel’s comments also echo those coming out of the Federal Reserve.

• Next UK Inflation Report:  17 July 2024.
• Next Bank of England Rate Decision:  1 August 2024.