The Bank of England left rates at 5.25% ahead of the election, despite moderate inflation
This Thursday coincided with the meetings of the three main central banks of the European continent: Bank of England, Bank of Norway and Bank of Switzerland. While the first two decided to keep interest rates unchanged, the second decided to make the second cut in this round of cuts.
Two weeks after Elections will take place in the UK on July 4th.The Bank of England decided maintain the base interest rate for its operations at 5.25%, the highest level since 2008 and unchanged for the seventh straight meeting, the body, which will not meet again until August, announced.
The decision to keep the price of money stable was designed to seven votes for, Bye two committee members voted to cut the rate by a quarter pointup to 5%, according to the decision of the previous meeting of the institution.
Monetary policymakers made this decision despite the fact that The annual inflation rate in the UK was 2% in May last year. three-tenths below the price increase recorded in April and the lowest index value since July 2021.
Thus, the British consumer price index continues to decline, as in October 2022 it reached a record level since 1997 of 11.1%, meeting for the first time since July 2021 Bank of England target of 2%.
However, on Thursday the Bank of England reported that service sector inflation was 5.7% in May, down from 6% in March but slightly above forecast.
“The committee’s mission is clear: the inflation target is always applied, “Reflecting the priority of price stability within the UK’s monetary policy framework,” it said, adding that its monetary policy will ensure the consumer price index returns to the 2% target on a sustainable basis over the medium term.
Norway also supports
Like the Bank of England Norges Bank kept its base interest rate unchanged at 4.5%. And postponed possible cuts until next year.
High rate increases in recent years have cooled the Norwegian economy and slowed growth inflation, which nevertheless exceeds the target of 2%. This was the institution’s argument to keep the price of money unchanged and to warn that it would remain that way until at least 2025.
“If we cut rates too early, price increases could remain above target for too long,” Norges Bank members said in a statement released after the decision.
The Central Bank of Norway, a non-European Union (EU) country, has increased rates 14 times since the fall of 2021but this They have remained at 4.5% since December last year.
Switzerland goes down again
Members of the Swiss National Bank (SNB) also met this Thursday. But, unlike their British and Norwegian colleagues, they decided reduce the official interest rate by 0.25 percentage points, to 1.25%.
This is the second reduction in the price of money in the Swiss country since the institution decided to begin lifting its restrictive monetary policy in March last year.
“Inflation has increased slightly in recent months. Core inflation pressure continues to decline compared to the previous quarter due to slightly smaller second-round effects,” said Swiss National Bank President Thomas Jordan, who will leave his post next September.
After the second interest rate cut, the Swiss central bank remains at the forefront of central banking major developed economies in reversing the cycle of monetary policy restrictions, after The European Central Bank (ECB) made its first rate cut in early June.