The Bank of England has dropped its growth to the British economy this year, as it reduced the main interest rate on Thursday for the third time in six months.
In a statement, the Monetary Policy Committee, consisting of nine members of the bank, reduced the main interest rate by a quarter of a percentage point to 4.50 %, and took it to its lowest level since mid -2013.
This decision was widely expected in the financial markets.
Unless expected is the scale of low growth in economic expectations associated with the bank. The bank now expects that the British economy will not grow 0.75 % this year, down from its previous 1.5 % expectations only three months ago.
If it turns out to be accurate from remoteness, this will be very disappointing news for the new UK’s work government, which made growth its first task because it will enhance living standards and generate funds for public services that have been criticized. With the proof of growth, the party’s popularity has decreased sharply since its victory in the elections in July.
Rachel Reeves, head of the Treasury, who faced criticism to raise taxes on business on its first budget last October, welcomed the reduction in the interest rate, but said that she “is still not satisfied with the growth rate” and that the government will go “faster to economic growth”
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There is no doubt that the government hopes that the central bank will help this by reducing interest rates in the coming months because it will contribute to low mortgage rates and cheaper loans, despite reducing the returns provided to savers.
Financial markets remain unconfirmed with regard to the number of additional discounts that will be there this year as the bank also expects that the expected inflation will expect in the next few months – and the inflation will reach 3.7 % at some point in the first half of the year, before drifting again towards a rate The target is 2 %.
Given that the background of growth and inflation, bank ruler Andrew Billy said that the expectations of the British economy have been unconfirmed, and could become unsure whether US President Donald Trump is going through his identification threats.
“We will monitor the British economy and global developments closely and take a gradual and accurate approach to reduce prices,” said Billy. “Low and stable inflation is the basis of a health economy, and the mission of the Bank of England is to ensure this.”
It was a big surprise in the average decision on Thursday that two of the nine members of the committee voted to reduce more than half a percentage point to 4.25 %.
Luke Bartholomeo, a chief economist at ABRDN, previously, said that the second fact has been depicted to reduce the greater “giving a feeling of the interest of some policy makers about the opposite winds of growth.”
The price status board does not target growth directly as its specialization is to ensure that inflation, as it was measured by the consumer price index, reaches a goal of 2 % over the next two years or so. However, decrease in growth can maintain inflation in the choice because it is an indication of low demand in the economy.
Although inflation stands by 2.5 % and is expected to rise in the coming months, partly as a result of the increase in the work tax from the new Labor Party government, most economists believe it will decrease towards the target, and thus the committee’s ability to reduce on Thursday.
Low inflation from the levels that were seen two years ago, partly due to the significant increased borrowing costs from near zero during the Koronavirus virus in the pandemic. Then the prices began to shoot, first as a result of the supply chain issues, and then due to Russia’s full invasion of Ukraine, which prompted the energy costs to the top.
As inflation rates have decreased from their highest levels, central banks, including the American Federal Reserve, began to reduce interest rates, although few economists believe that prices will return to very low levels in the years that followed the world the financial crisis in 2008-2009 and during The epidemic.
And copied 2025 Canadian press
