In the UK, the Bank of England’s (BoE) stance on monetary policy and the future path for interest rates have been hot topics since the beginning of the year, and for good reason. Opposing forces, of both stagnating economic growth and stubborn inflation, are expected to have an impact on UK interest rate decisions in 2025. However, on the whole, Fathom does not expect interest rates to reduce much, with just one cut forecast over the course of 2025. Refresh this chart in your browser | Edit the chart in Datastream Stagnating economic growth has been a recurrent issue for the UK

The latest UK headline inflation figure surprised on the downside, coming out at 2.0% in May. The reading was down from 2.3% in April and meant that headline inflation reached the Bank of England target level for the first time in three years. Non-energy industrial goods (particularly household goods, clothing and footwear, and vehicles), food, alcohol and tobacco were the categories that contributed the most to the slowdown, while transport (particularly motor fuels) was a positive contributor. Refresh this chart in your browser | Edit the chart in Datastream Despite the lower figure, the gap between overall goods and services inflation has

The Bank of England (BoE) is in a bind. Should it hike interest rates further and risk sinking the housing market, and perhaps the economy? Or should it sit tight and hope that inflation comes down on its own — but risk even higher inflation and bigger economic problems further down the line? The Bank has not exactly been sitting tight over the last year or so – it has raised Bank Rate from 0.1% to 5.0% since November 2021. But clearly, it has not raised interest rates fast enough to root out inflation, which is both a lot higher

A flock of hawks flew over financial markets on Thursday. Central banks in the UK, Switzerland, Norway and Turkey all raised interest rates. Sticky inflation demands aggressive action. But as economies weaken, rate-setters may come under fire from politicians. Britain’s Andrew Bailey and Turkey’s Hafize Gaye Erkan look particularly vulnerable to political attacks. The four central banks face similar problems. Although annual inflation rates range from 2.2% in Switzerland to 39.6% in Turkey, the policymakers are all concerned about consumer prices remaining high for too long. Increasing interest rates is the only weapon they have to bring inflation back to

The FTSE 100 has outperformed counterparts so far this year – but Refinitiv’s Dewi John told Reuters that investors need to be careful as the Bank of England raised fears of stagflation. This video originally appeared on Reuters TV: Sectors UpClose on 5 May 2022.

The Bank of England’s August Monetary Policy Report included an update of their macroeconomic projections out to 2024. The Bank now expects UK inflation to peak at 4% towards the end of this year and start of 2022, before drifting back towards target by the end of the forecast horizon. While many, including Fathom, agree with the Monetary Policy Committee’s assessment of the near-term outlook, there is less consensus beyond the end of this year. Key in the medium term will be how quickly excess pandemic-induced savings are spent and the extent to which higher short-run prices get embedded into

Long before it became fashionable, Fathom Consulting pointed to low interest rates as the reason for the UK’s dire productivity performance, arguing that ‘too low for too long’ was damaging the supply side by preventing the gales of creative destruction. With that in mind, we welcome last Thursday’s signal from the UK’s MPC that it intends to tighten in the coming months, an impression enhanced by both Ian McCafferty and Michael Saunders voting for an immediate 25 basis point increase. But as we explained to clients last week, a rate hike at the Committee’s next meeting in May is not

The Bank of England will allow British lenders to lean on taxpayers a while longer. The UK regulator on Nov. 8 gave banks two more years to meet new thresholds for holding bonds that absorb losses if they fail – debt instruments designed to bring an end to state bailouts. It’s part generosity and part pragmatism. At first blush, it looks like the BoE has just gone soft on the UK’s globally systemic banks – Barclays, HSBC, Royal Bank of Scotland and Standard Chartered. As well as extending the deadline to 2022, the BoE has indicated that the so-called minimum

In normal times, Mark Carney’s tenure as governor of the Bank of England would be of little interest beyond British policy circles. Though the central bank’s role has evolved over its 322-year history, its fate does not depend on a single leader. But these are not normal times – and that is why Britain will be better off if the Canadian extends his term. The vote to leave the European Union has thrown long-established policies into flux. Perhaps inevitably, Carney has become a high-profile target for criticism. Those who backed Brexit accuse him of taking sides in the referendum by