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☆ The Bank of England has 'some room' to cuts rates but it's unlikely, economist says
▼ + stars: | 2024-09-19 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailThe Bank of England has 'some room' to cuts rates but it's unlikely, economist saysYael Selfin, chief economist at KPMG UK, discusses the country's inflation data and what it could mean for the Bank of England's decision.

Persons: Yael Selfin Organizations: of England, KPMG UK, Bank of

☆ UK inflation posts first rise in almost a year
▼ + stars: | 2024-01-17 | by ( Hanna Ziady | ) edition.cnn.com time to read: +2 min

London CNN —UK inflation accelerated in December for the first time since February last year, official data showed Wednesday. Core inflation, which strips out volatile food and energy prices, remained stuck at 5.1%, while services inflation increased from 6.3% to 6.4%. The UK data mirrors the trend in the United States and Europe of slight upticks in headline inflation. Energy prices could also rise if the conflict in the Middle East escalates further. Still, several leading UK economists shrugged off the latest increase in inflation, noting that inflation could return to the Bank of England’s 2% target by the spring, helped by recent falls in energy prices.

Persons: Grant Fitzner, shrugged, ”, Roger Barker, Yael Selfin Organizations: London CNN —, National Statistics, Reuters, US Federal Reserve, European Central Bank, Bank of England’s, Institute of, KPMG, Bank of England Locations: United States, Europe, Red

A day after Britain's fast pace of price growth unexpectedly slowed, the BoE's Monetary Policy Committee voted by the narrowest margin of 5-4 to keep Bank Rate at 5.25%. But rate futures suggested they still saw a 50% chance of Bank Rate rising to 5.5% by the end of this year. Britain's economy, hit hard by Brexit, the COVID-19 pandemic and the surge in gas prices triggered by Russia's invasion of Ukraine, has been struggling with the highest inflation rate in the Group of Seven. But growth remains fragile, heightening the risk that the BoE's 14 back-to-back rate hikes will push the economy into a recession. Last week, the European Central Bank raised rates but suggested its move might be the last for now.

Persons: Andrew Bailey, Jon Cunliffe, Megan Greene, Jonathan Haskel, Catherine Mann, BoE, Reuters Graphics Sterling, Bailey, Rishi Sunak, Peter Nicholls, Frances Haque, Reuters Graphics Bailey, Yael Selfin, Hugh Gimber, William Schomberg, Catherine Evans Organizations: Bank of England, Reuters Graphics, U.S ., MPC, REUTERS, Santander UK, IF, U.S . Federal Reserve, European Central Bank, KPMG, Investors, Bank of, Morgan Asset Management, Thomson Locations: Ukraine, London, Britain

Investors put a nearly 50-50 chance on the BoE keeping rates on hold on Thursday after 14 back-to-back increases stretching back to December 2021. Investors had been overwhelmingly expecting the BoE to raise interest rates for the 15th time in a row on Thursday, taking Bank Rate to 5.5% from 5.25%. "The inflation figures may not sway the Bank of England away from raising interest rates tomorrow," Yael Selfin, chief economist at KPMG UK, said. Britain's inflation rate remains high - topped only by Austria and Iceland among Western European countries in August. But core inflation - which strips out volatile food and energy prices - fell by more than the headline rate to 6.2% from 6.9% in July.

Persons: Hunt, BoE, Yael Selfin, Price, Rishi Sunak, Jeremy Hunt, William James, Hugh Lawson Organizations: Reuters, Bank of England, Sterling, U.S, Investors, National Statistics, KPMG, Labour Party, Thomson Locations: July's, British, Austria, Iceland, Western, Britain

☆ UK inflation slows to lowest level in more than a year
▼ + stars: | 2023-07-19 | by ( Hanna Ziady | ) edition.cnn.com time to read: +2 min

London CNN —UK inflation eased more than expected in June, slowing to its lowest annual rate since March 2022, official data showed Wednesday. Consumer prices rose 7.9% last month compared with a year ago, down from 8.7% in May, the Office for National Statistics said. “Inflation slowed substantially … driven by drops for motor fuels,” ONS chief economist Grant Fitzner said in a statement. “While the Bank of England will welcome the fall in inflation, it is unlikely to substantially change its hawkish policy stance,” said KPMG chief economist Yael Selfin. “The main story today is that inflation is lower than expected, fueling a narrative that we are through the worst,” said Kitty Ussher, chief economist at the Institute of Directors.

Persons: Grant Fitzner, ”, Yael Selfin, Paul Dales, Selfin, “, Kitty Ussher, … Organizations: London CNN —, National Statistics, Reuters, Bank of England, ONS, “, KPMG, Capital Economics, ”, Institute of Directors

Inflation, which hit a 41-year high of 11.1% in October, continued to eat into the spending power of workers whose pay is rising by less. Britain's headline inflation rate is now the highest in western Europe and compares with an average of 6.9% in the euro zone and 5.0% in the United States. Austria recorded a higher inflation rate than Britain in February. Reuters GraphicsPOLITICAL PRESSUREHigh inflation is a problem for Britain's government as well as the BoE, which forecast in February that inflation would be below 4% by the end of the year. Producer price inflation - which measures changes in prices charged and paid by manufacturers and often leads changes in CPI - tumbled in March due to lower oil prices.

☆ UK economy shows no growth in February as strikes weigh
▼ + stars: | 2023-04-13 | by ( ) www.reuters.com time to read: +2 min

Economic output was flat in month-on-month terms in February, the Office for National Statistics (ONS) said on Thursday. A Reuters poll of economists had pointed to growth of 0.1%. The ONS revised up January's monthly growth rate in the overall economy to 0.4% from a previous estimate of 0.3%. "A combination of upward revisions in GDP data and an improvement in global economic conditions could help the UK economy avoid a recession this year," Yael Selfin, chief economist at KPMG UK, said. "While this will provide relief for policymakers, the outlook for growth in the medium-term remains relatively weak by historical standards."

But only one policymaker, Catherine Mann, wanted to match November's bigger 0.75 percentage point increase - the BoE's largest in more than 30 years - and two MPC members voted to keep rates on hold. Sterling weakened against the U.S. dollar after the BoE's decision, falling to around $1.23, and it also declined against the euro. "While the 50-basis-point increase in the Bank rate was as expected, the extent of the divisions across the committee is an eye-opener," Philip Shaw, an economist with Investec, said. On Wednesday, the U.S. Federal Reserve also slowed the pace of its rate hikes while pointing to more tightening in 2023. That 0.4 percentage point fall in the annual rate was the largest since July 2021.

☆ ‘Difficult decisions’: Britain announces higher taxes and spending cuts
▼ + stars: | 2022-11-17 | by ( Julia Horowitz | ) edition.cnn.com time to read: +5 min

London CNN Business —The United Kingdom has already entered a recession and is battling decades-high inflation, eroding standards of living for millions of people across the country. Britain’s painful planThe United Kingdom is in a recession that will last just over a year, the country’s budget watchdog said in a new forecast released Thursday. The United Kingdom is also increasing its windfall tax on oil and gas companies, while slapping a new levy on electricity generators. “We do have to take difficult decisions on public finances, so we’re going to grow public spending, but we are going to grow it more slowly than the growth in the economy,” Hunt said. The Bank of England has said the United Kingdom could be in a recession for two years.

"The ongoing squeeze on household finances continues to weigh on growth, and likely to have caused the UK economy to enter a technical recession from the third quarter of this year," Yael Selfin, chief economist at KPMG UK, said. Manufacturing fell by 1.6% from July and more maintenance than unusual in the North Sea hit the mining and quarrying sector which includes oil and gas. "Many other consumer-facing services struggled, with retail, hairdressers and hotels all faring relatively poorly," ONS Chief Economist Grant Fitzner said. GDP in September is likely to be weakened by a one-off public holiday to mark the funeral of Queen Elizabeth. The International Monetary Fund said on Tuesday it expected British GDP to grow in 2023 but only by 0.3%.

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