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The Bank of England halved its growth prognosis in 2025 and reduced interest rates for a quarter points at 4.5 percent, as it struggles with the stagnating economy of the UK and the increasingly uncertain international environment.
In the stroke of the UK Cancer Rachel Rachel Reeves, Boe He said he expects an economy to grow 0.75 percent this year, half of his November a forecast of 1.5 percent, and for inflation to grow before he withdraws.
The forecasts, which will be afraid of the fear of the Stagflation, followed all nine members of the Moetarial Policy Committee voted a decrease in reference values prices of their previous 4.75 percent.
Most of the seven favored a quarter of the point of points, while two supported a half -point reduction, including Catherine Mann, a previously leading falcon.
“Now we expect GDP growth to be significantly weaker in the short term before being picked up since the middle of the year,” said Boe Governor Andrew Bailey.
The odds for the lower rates took FTSE 100 to a record high intradal high and borrowed the bond market, but pushed a pound.
Neil Birrell, the Chief of Investment Director in Prime Minister Miton investor, said the reduction of the rate was intended to “encourage the economy” which is “above”.
He added that the half -point reduction voices made it clear about the British “Parlia economic growth”.
Boe estimated that GDP fell 0.1 percent in the last quarter of 2024, although it predicted that picking up in growth of 1.5 percent for 2026 and 2027.
Replace markets expect two further reduction in the rate this year, with 60 percent of the chance for a third. Prior to the decision, this probability was approximately 35 percent.
But the Central Bank said she would need a “careful” approach to further reduction of the rates, suggesting that market expectations of a quarterly procession are exaggerated.
It said that Reeves ‘decision to increase the contribution of national employers’ contributions to employers will reach and jobs and prices more than expected, with the unemployment rate increased to 4.8 percent in the following year, 0.5 points higher than the previous forecast .
“We definitely have a deteriorating chance of growth, but with a stubborn inflation,” said Nick Hayes, head of fixed income in AXA investment managers. “The good news for the bond market is that the most important member has become the most pigeons.”
Two -year -old Gilts gathered, with yields that reflect the expectations of interest rates and vice versa move on prices, reduce 0.04 percentage points to 4.11 percent in the early afternoon store.
It went crazy a day by 1 percent compared to a dollar in the amount of $ 1,238.
FTSE 100, many of which are members of the dollar revenues, increased by 1.6 percent. Builders and construction shares also increased.
Reeves welcomed the reduction of the rate, saying that it would facilitate the cost of living for families and make it easier for companies to grow.
But she added, “I’m still not satisfied with the growth rate.”
The opposition conservative party said that Reeves’s “poor management” of the economy would limit the scope for future reduction.
Boe predicts that inflation will increase to 3.7 percent in the third quarter of this year, primarily due to higher energy prices, before withdrawing about 2.5 percent and a goal 2 percent in 2027 during 2026.
Bailey said Boe expects to “be able to reduce the bank rate further as the disinflation process continues.” But he admitted that now he is “greater uncertainty” about how fast inflation will fall.
The bank also noticed “an increase in economic uncertainty at globally and take over the financial market volatility,” the minutes of this week’s meeting states. He added that the “careful monitoring” of the tariff plans of the new Donald Trump administration.
The US president has hinted that in the UK they can be spared duties planning to impose trade partners such as EU, Canada and Mexico.
Bailey said that Trump’s tariffs would contribute to “fragmentation” of global economy, it would be negative for growth, but if implications on inflation were far more difficult to separate, because it is not known how the countries would react.
He added that Boe did not include the influence of the tariff in the forecasts of inflation “because we simply do not know what will happen.”
