There Bank of England The ECB is followed by and Cut the rates at the beginning of 2025with an adjustment of the rates of 25 basis pointsin line with that announced by the ECB last week. A cut that tries to relaunch an economy that struggles and that makes you slow on a slowdown in inflation. More caution for the next few monthswhen a cautious and gradual approach is recommended.
There pound has devalued itself After Boe’s decision, reaching 1,1956 against Euro (-0.5%) and 1,2398 against the green ticket (-0.86%).
A decision made by a majority
The Monetary Policy Committee of the Bank of England (BOE) voted for Reduce the interest rate key of 25 basis points at 4.5% with a majority of 7-2fully hitting the expectations of analysts. Two members would have preferred to reduce the interest rate of 50 basis points, or to 4.25%. Nobody voted for maintaining rates on the current level.
Inflation down
The decision was made by the British central bankers Thanks to the drop in inflation. “In the last two years – explains the statement – they have registered significant progress in disinflationsince the previous external shocks have attenuated and the restrictive position of monetary policy has slowed down the effects of second round and stabilized long -term inflation expectations “.
“Such progress allowed the Comittee Monetary Policy gradually withdraw a certain degree of political moderationwhile maintaining the interest rate of 0.25 percentage points in restrictive territory in order to continue to eliminate the persistent inflationary pressures “.
Looking forward
The Boe provides that the major global energy costs and regulated price variations will push the CPI inflation to 3.7% in the third quarter of 2025, even if the underlying internal inflationary pressures will decrease further. While inflation is expected CPI will return around the 2%target, The Committee will pay close attention to any consequent sign of more lasting inflationary pressures.
In addition, the GDP growth will resume from the mid -year. The labor market has continued to relax and is believed that it is widely in balance. There productivity growth It was weaker than previously estimated and the Committee believes that the growth of the offer capacity of the economy has weakened. As a result, the recent slowdown in the application is believed to have only led to a small erade margin.
Cautious and gradual strategy
On the basis of evolving expectations on medium -term inflation prospects, Boe members consider “appropriate a gradual and cautious approach“, Based onfurther withdrawal of the restriction of monetary policy.
