Bank of England keeps benchmark rates unchanged at 15-year high of 5.25%

livemint.com:

BOE's forecasts was on the idea that if interest rates stay the same, inflation is expected to reach its target in early 2025. This would happen at least six months earlier than the estimate derived from market expectations of interest rate reductions starting in August. Governor Andrew Bailey agreed with his colleagues about the “restrictive" policy stance needed “for an extended period of time" to deal with the high rate of inflation in Britain.

The remarks rule out any chances of rate cuts in the second half of next year as the UK prepares for a general election. “Higher interest rates are working, and inflation is falling. We need to see inflation continuing to fall all the way to our 2% target.

We’ve held rates unchanged this month, but we’ll be watching closely to see if further rate increases are needed" Governor Andrew Bailey said. The restrictive stance comes as the central bank of the UK faced backlash over its failure to act quickly against the rising inflation rate. The central bank officials have still not talking about a technical recession, but analysts are already projecting a 50% chance of the recession.

The current projection for GDP suggests that it will remain at a standstill with no growth in 2024, in contrast to the earlier expectation of a 0.5% expansion. As the rising interest rates put businesses under pressure, the firms may resort to workforce reductions. Unemployment in Britain is expected to rise at a faster rate, reaching 4.3% by the end of this year and touching as high as 5.1% by the end of 2026, as per Bank of England's projections.