Articles

Bank of England chief economist Hugh Bell has suggested that keeping interest rates at their current level would be enough to bring inflation down to a 2% target within two years. In a presentation to the UN General Assembly, Bell said: “Having set monetary policy in constrained territory, it’s not that we need to raise interest rates in order to lower inflation. Keeping interest rates at their current restrictive level will continue to weigh on inflation.” Although inflation has fallen from a peak of more than 11% in October, it remains at 6.7%. “We seem to have determination there,” Bell said. “This is what makes it so important, for me, that the restrictive stance of monetary policy, as reflected in the bank interest rate at 5.25%, and that this restrictive response must also be continuous, in order to take the inflationary situation out of order, and the Bank of England expects that it will not reach the target until the end of 2025, largely due to the tightness of the labor market. Last week, the Bank of England kept its benchmark interest rate at a 15-year high of 5.25 percent, and said it was not considering cutting it as it continued to focus on lowering inflation. Bell also said it was incorrect to view the central bank’s comments on monetary policy expectations as a firm commitment, rather than reasonable scenarios. “There is no promise here as we respond to events. “Events in the Middle East are clearly the focus of attention at the moment for reasons that I think are obvious.” On Wednesday, Governor Andrew Bailey said it was “too early to talk about cutting interest rates,” days after Bell said it was “not unreasonable” for investors to bet on a rate cut by next summer.

Pound Rises on Bank of England and Moderate Growth Expectations

Euro Sterling rose on Thursday after Bank of England policymakers, including chief economist Hugh Bell, stressed that policy should remain constrained for some time. “We need a sustained level of restrictions over the next stretch,” Bale said. Earlier this week, Bell said market rates pointing to the first rate cut in August 2024 “don’t seem unreasonable at all.” But on Wednesday, Bank of England Governor Andrew Bailey stressed that monetary policy should remain constrained for a long time. “It’s too early to talk about cutting interest rates,” Bailey said. Against the euro, sterling rose 0.05% to 87.12 pence, but is still far from a three-week high of 86.50 hit on Monday. Sterling fell 0.2% against the strong dollar to $1.2259, moving away from a nearly two-month high of $1.2428 touched on Monday. Yesterday Bank of England Governor Bailey witnessed a degree of cold water on the previous assessment from Chief Economist Bill regarding market pricing for the Bank of England’s cut as early as August Sterling is likely to weaken towards October’s levels against the euro and move back towards $1.2220 against the dollar as UK GDP data on Friday could show consumers remain conservative about spending amid a moderate labor market. Markets are currently pricing around 10 basis points for Bank of England policy easing as early as May, and further rate cuts over the summer. Earlier this week, Bell said market rates pointing to the first rate cut in August 2024 “don’t seem unreasonable at all.”

Bank of England warning trade fragmentation and impact on stability global economy

The governor of the Bank of England warned against the “fragmentation” of global trade, saying that Brexit had reduced the opening up of the British economy, David Conet wrote. Andrew Bailey said the pandemic and global political tensions had divided the global economy and warned he was “at risk of further pressures”. He added that fragmentation makes the economy “inherently less stable” and carries risks to financial stability. Bailey called for strong international coordination on regulation. As a public official, I take no position on Brexit and he told a Bank of Ireland conference in Dublin: “This was a decision of the people of the UK.”. This has led to a decline in the openness of the UK economy, although over time, new trade relationships should be established around the world, and I expect this to happen. “Of course, this requires a commitment to openness and free trade.” Opening up the world economy to increase trade flows and the flow of finance to support such trade was no longer the traditional approach. Bailey said some trade links “have turned out to be less flexible than we expected, and we shouldn’t give up on openness.””. Diversifying supply chains to increase resilience does not need to include protectionism and his recent visit to Newry in Northern Ireland has given him “a real sense of optimism towards companies seizing the opportunities offered by open economies”. Last week, the Bank of England kept its benchmark interest rate at 5.25% and said it was not considering cutting it because it continued to put pressure on inflation that reached 6.7% in September, below the peak of 11.1% in October 2022 but still more. Triple its goal of 2%. Britain saw some of the biggest large-scale declines in house prices since 2009 last month

Keeping interest: Bank of England avoids changes in inflation policy

The Bank of England’s chief economist backed keeping interest rates at their current record levels on Thursday, as the central bank continued to prioritize tackling inflation. In a speech to the Institute of Chartered Accountants in England and Wales, Hugh Bell said monetary policy was now in “restricted territory” and that central banks did not need to raise interest rates “in order to reduce inflation”. Instead, he said, “Keeping interest rates at their current restrictive level will continue to put pressure on inflation. “Maintaining a restrictive stance is key to achieving the inflation target. “We are more confident that we can bring inflation to the target level, but we will keep interest rates at the current level for an extended period.” His comments echo those made by Governor Andrew Bailey, who said on Wednesday it was too early to talk about rate cuts. The Bank of England has raised interest rates 14 times since the end of 2021, and the cost of borrowing now stands at 5.25% – the highest level in 15 years. Last week, the MPC kept interest rates steady for the second time and lowered its growth forecast, leading to speculation that the current rate tightening cycle had paused. Most now expect the next step to be a cut, although interest rates are not expected to start falling until late summer 2024. Meanwhile, inflation eased from an October 2022 high of 11.1%, but at 6.7% remains well above the Bank of England’s target of 2%. The Bank of England does not currently expect to meet this target until the end of 2025.