The Bank of England decided to keep interest rates as steady as a British queue on Thursday, leaving the U.K. economy to muddle through global trade chaos and a homegrown stagnation scare that’s got everyone clutching their tea mugs a bit tighter.
In a move shocking absolutely no one—except maybe your nan who still thinks “interest” is just what she has in her knitting—the central bank’s benchmark rate stays put at a cool 4.5%, because why mess with a number that sounds like it could be a decent pub quiz score?
The Monetary Policy Committee, in a statement that probably took longer to write than it did to decide, said they voted 8-1 to keep rates unchanged—clearly, one member didn’t get the memo that “change” is scarier than a soggy scone.
“Since our last chinwag, global trade policy has gone from murky to full-on ‘did someone turn off the lights?’ territory,” the statement quipped, pointing fingers at the U.S. and its tariff tantrums that have some governments retaliating like it’s a playground spat.
“Plus, with geopolitical uncertainties popping up like uninvited guests at a garden party, financial market volatility is spiking faster than a Brit’s blood pressure during a football penalty shootout,” it added with a wry smirk.
Paul Dales, U.K. chief economist at Capital Economics, chimed in with a note saying, “The BOE was always going to stick to its cut-hold-cut-hold dance routine—like a bad reality TV contestant—but this time, the vote was more hawkish than a falcon eyeing a pigeon, which is the opposite of February’s dovish disco.”
Back in December, when rates last took a breather, three MPC members were begging for a cut like kids after extra pudding, but now only one’s waving the “lower it” flag, Dales noted, probably while sipping tea and shaking his head.
This all comes as the U.K. braces for economic winds so heady they’d knock off the Queen’s hat—think Trump’s tariff roulette and a economy that shrank 0.1% in January, proving even the numbers are too tired to grow.
The BOE, back in February, slashed its 2025 growth forecast to 0.75%—a figure so low it’s practically limboing under the optimism bar—and on Thursday, it muttered something about business indicators looking as weak as a cuppa made with reused teabags.
Oh, and inflation? It’s expected to hop up to 3.7% by Q3 because energy costs are rising faster than a Brit’s eyebrows at the word “Brexit”—and January’s 3% spike was hotter than a vindaloo on a summer day.
Looking ahead, the BOE said it’d take a “gradual and careful” approach to easing monetary policy—like a granny crossing the road with a Zimmer frame—though it’s all up in the air depending on how the economy behaves.
“If demand flops harder than a panto villain, inflation might chill out, and we’d ease up on the rate reins,” they mused. “But if supply’s tight and wages get sticky—like gum on a pub floor—we’d have to tighten the screws.”
Dales pointed out that while the BOE’s statement had a few dovish whispers, the hawkish tones were louder than a foghorn at a silent retreat—suggesting rate cuts are about as likely as a sunny bank holiday.
Post-decision, the pound took a 0.3% tumble against the dollar—like it tripped over its own shoelaces—while gilt yields dipped, because who doesn’t love a slightly cheaper government IOU?
This all lands just before some unpopular tax changes hit businesses harder than a soggy chip butty, with firms moaning that their tax burden might squash growth, investment, and jobs like a poorly timed rain at Wimbledon.
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