www.bbc.com Open in urlscan Pro
151.101.64.81  Public Scan

Form analysis
0 forms found in the DOM

Text Content

LET US KNOW YOU AGREE TO COOKIES

We use cookies to give you the best online experience. Please let us know if you
agree to all of these cookies.

Yes, I agree

No, take me to settings

BBC Homepage
 * Skip to content
 * Accessibility Help

 * Sign in


 * Home
 * News
 * Sport
 * Earth
 * Reel
 * Worklife
 * Travel
 * More menu

More menu
Search BBC
 * Home
 * News
 * Sport
 * Earth
 * Reel
 * Worklife
 * Travel
 * Culture
 * Future
 * Music
 * TV
 * Weather
 * Sounds

Close menu
BBC News
Menu
 * Home
 * Israel-Gaza war
 * War in Ukraine
 * Climate
 * Video
 * World
 * UK
 * Business
 * Tech
 * Science

More
 * Entertainment & Arts
 * Health
 * World News TV
 * In Pictures
 * BBC Verify
 * Newsbeat

 * Business
 * Market Data
 * New Tech Economy
 * Companies
 * Technology of Business
 * Economy
 * CEO Secrets
 * Artificial Intelligence
 * Africa Business
 * Paths to Success




BANK HOLDS INTEREST RATES AND WARNS IT'S TOO EARLY TO CUT

Published
21 hours ago
comments
Comments

Share
close panel
Share page
Copy link
About sharing
Image source, Getty Images
By Dearbail Jordan & Faisal Islam
Business reporter and economics editor, BBC News


The UK economy is likely to see zero growth until 2025, while interest rates
remain high for longer or rise further, the Bank of England has warned.

It came as the Bank left rates on hold for the second time in a row at 5.25%,
the highest level in 15 years.

Rishi Sunak has pledged to get the UK growing by the end of the year, but the
lower forecasts put this in doubt.

Despite the subdued outlook, Bank boss Andrew Bailey said it was "much too early
to be thinking about rate cuts".

However, the Bank expects inflation - the pace at which prices rise - to fall
sharply in the coming months.

This means the prime minister is on track to meet his promise to halve inflation
to about 5% by the end of the year.



Up until September, the Bank of England had raised rates 14 times in a row to
tame soaring inflation, which has been squeezing household budgets.

It has led to increases in mortgage payments, squeezing borrowers, but also
resulting in higher savings rates.

 * How interest rates affect you and your money
 * Rate freeze ends run of 14 straight increases
 * High rates hurting low paid, says Bank member

"We will keep interest rates high enough for long enough to make sure we get
inflation all the way back to the 2% target," said Mr Bailey.

"We'll be watching closely to see if further rate increases are needed."

The most recent inflation figure was 6.7% in the year to September.

The Bank expects it to continue to fall as energy and food price rises ease and
predicts that it will remain at around 3% throughout next year, above the 2%
target.



Mr Bailey told the BBC, however, that if the Israel-Hamas conflict spreads
throughout the Middle East, it could have a knock-on effect on energy prices.

"It is a risk, clearly, that any sort of wider disturbance in the Middle East
can obviously threaten energy prices, both oil and gas, and we watch that very
carefully. So yes, we do see that as a risk going forwards."

But he said that the conflict - which he described as a "human tragedy" - had
not resulted in much movement in energy prices yet, describing that as
"obviously encouraging".

While the Bank is not predicting a recession, it expects zero growth from now,
across the whole of next year - when there is likely to be a general election -
and into 2025.

"UK economic growth is slowing," the Bank said.

Mr Bailey described the outlook for UK economic growth as "subdued" but he said
that the situation was "not that unusual". Germany, which is Europe's biggest
economy, has slipped in and out of recession.



"If you look at other countries, you're seeing pretty similar pictures quite
frankly and one or two others are in recession at the moment," he said.

Chancellor Jeremy Hunt promised there would be measures to get Britain growing
again when he unveils the government's plans to try and boost the economy in its
Autumn Statement later this month.

"The Autumn Statement will set out how we will boost economic growth by
unlocking private investment, getting more Brits back to work, and delivering a
more productive British state."

But Labour said 13 years of "economic failure" had "left working people worse
off", while the Liberal Democrats called the interest rates decision a "cold
comfort for the millions of hard working families".


'BUYING OUR FIRST HOUSE SEEMS FURTHER AND FURTHER AWAY'


Image caption,
Ebony Cropper's rent has gone up, making saving for a deposit to buy a home
harder

Mortgage rates have shot up as the Bank of England has put up interest rates.
That has affected first-time buyers, people remortgaging and those on variable
and tracker deals.

In the UK, the rate on an average five-year, fixed-rate residential mortgage is
5.87%, down slightly from levels seen earlier this year but still high compared
with a few years ago.

Ebony Cropper from Warrington and her fiancé are saving up for a deposit to buy
their first home. But while they are budgeting hard, their rent went up an extra
£45 a month in August making the job harder.

"We got engaged this year but then I think [the wedding] has got to wait because
it's a big expense as it is for just one day and a house is more important," she
told the BBC.

"It just feels a bit futile at the moment because your goal [of owning a home]
is getting further and further away."

Although interest rates are currently on hold, there is more pain to come from
the rate increases we've already seen, warned Dr Anna Valero, fellow at the
London School of Economics and a member of the chancellor's economic advisory
council.

"Because of the way monetary policy transmits through the economy there is this
lag.

"Since we've had all these previous rate hikes, they still need to be felt -
through people who will be renewing mortgages through next year, through
businesses seeing increased borrowing costs and then all the implications [from
that]," she told the BBC.




WAYS TO SAVE MONEY ON YOUR MORTGAGE

1. Make overpayments. If you still have some time on a low fixed-rate deal, you
might be able to pay more now to save later.

2. Move to an interest-only mortgage. It can keep your monthly payments
affordable although you won't be paying off the debt accrued when purchasing
your house.

3. Extend the life of your mortgage. The typical mortgage term is 25 years, but
30 and even 40-year terms are now available.

Read more here




RELATED TOPICS

 * Personal finance
 * UK economy
 * Bank of England


MORE ON THIS STORY

 * Rate freeze ends run of 14 straight increases
   
   Published
   21 September
   
   

 * Interest rates expected to be held after small growth
   
   Published
   12 October
   
   

 * Interest rates tipped to be held as jobs market slows
   
   Published
   24 October
   
   

View comments




TOP STORIES

 * Live. 
   
   Israel on 'very high alert' at Lebanon border as Hezbollah leader speaks

 * Bowen: Five new realities after four weeks of Israel-Gaza war
   
   Published
   2 hours ago

 * Everyone got duped by Sam Bankman-Fried's big gamble
   
   Published
   3 hours ago





FEATURES

 * Children must be off limits, says father of abducted kids
   
   

 * 'I don’t want to die at 24' - trapped Gaza woman
   
   

 * Official nerves show as BBC hears praise for dead Chinese leader
   
   
 * 

 * Weyes Blood: I feel like I've lived a million lives
   
   

 * Why Trump's children are testifying in fraud case
   
   

 * Roses, cars and jeans: Has US trade deal helped Africa?
   
   

 * Why are fewer women using AI than men?
   
   

 * Gun battles and car crashes plague Europe migrant route
   
   

 * Political violence grips Bangladesh as election looms
   
   




ELSEWHERE ON THE BBC

 * The employees secretly using ChatGPT
   
   

 * Why aliens may be weirder than we think
   
   

 * Africa's safari trail with no tourists
   
   




MOST READ

 1.  1
     Hezbollah chief to break silence on Israel-Gaza war
 2.  2
     Bowen: Five new realities after four weeks of Israel-Gaza war
 3.  3
     Mushroom cook tried to kill ex four times - police
 4.  4
     Lisa Marie feared film would show 'predator' Elvis
 5.  5
     Storms and floods ravage Tuscany leaving six dead
 6.  6
     Pablo Escobar's feral hippos face cull in Colombia
 7.  7
     Germany's migrant row deepens as illegal arrivals soar
 8.  8
     Aerosmith's Steven Tyler accused of sexual assault
 9.  9
     Elon Musk tells Rishi Sunak AI will put an end to work
 10. 10
     Everyone got duped by Sam Bankman-Fried's big gamble





BBC NEWS SERVICES

 * On your mobile
 * On smart speakers
 * Get news alerts
 * Contact BBC News

 * Home
 * News
 * Sport
 * Earth
 * Reel
 * Worklife
 * Travel
 * Culture
 * Future
 * Music
 * TV
 * Weather
 * Sounds

 * Terms of Use
 * About the BBC
 * Privacy Policy
 * Cookies
 * Accessibility Help
 * Parental Guidance
 * Contact the BBC
 * Get Personalised Newsletters
 * Why you can trust the BBC
 * Advertise with us
 * Do not share or sell my info

© 2023 BBC. The BBC is not responsible for the content of external sites. Read
about our approach to external linking.