Bank of England keeps interest rates at 4.25% but hints at cuts to come
The Bank of England has left interest rates on hold at 4,25%, though it signalled further cuts in the cost of borrowing later this year after “clearer evidence” of rising unemployment amid a slowing economy,Six members of the Bank’s nine-member monetary policy committee (MPC) voted to keep rates on hold while three supported a reduction to 4%, to add to the four quarter-point cuts since last August,The Bank’s governor, Andrew Bailey, said interest rates “remain on a gradual downward path” after “seeing signs of softening in the labour market”,He cautioned, however, that the world was “highly unpredictable” and it was difficult to predict when interest rates would next be reduced.
Financial markets expect the MPC to reduce rates at its next meeting in August, and again to 3.75% before the end of the year.The economy shrank by 0.3% in April after a 0.7% boost in the first three months of the year, indicating a significant cooling in the outlook for growth in national output, or gross domestic product (GDP).
Vacancy rates have plummeted to pre-pandemic levels, unemployment has increased and wages growth has slowed.The MPC said in its report that business surveys “had continued to point to weak underlying GDP growth” and the Bank’s regional agents had said businesses were reluctant to invest while the outlook was clouded by uncertainty.A forecast for the rest of the year said growth would be just 0.25% in each quarter, though “slightly higher” than expected in May.The MPC expects inflation to rise temporarily in the coming months as a result of higher energy prices, and then to fall back later in the year as wage growth weakens.
Kathleen Brooks, the research director at the foreign exchange dealer XTB, said the Bank was mainly concerned with bringing inflation down to its 2% target, but it “sounds more worried about the growth outlook than the inflation outlook”,Paul Dales, the chief UK economist at Capital Economics, said: “We think it’s only a matter of time before the weakness in employment will lead to a big easing in wage growth,As a result, we continue to expect quarter-point cuts in August, November and February,”UK inflation edged down to 3,4% in May from 3.
5% in April, according to official figures published on Wednesday, reflecting falls in air fares and petrol prices.But the cost of food showed a marked increase, including a record rise in chocolate prices as a result of poor harvests in key producer countries.Bailey said earlier this month that Donald Trump’s tariff war made prospects for inflation and interest rates more ambiguous.He told MPs: “The path remains downwards, but how far and how quickly is now shrouded in a lot more uncertainty, frankly.”Since the MPC’s last meeting, the escalating crisis in the Middle East has raised concerns about the future path of oil prices.
The MPC report said the cost of Brent crude had risen by 26% to $79 a barrel since the previous report in May, “in part reflecting an escalation in the conflict between Israel and Iran”.European natural gas prices increased by 11%.Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionJames Smith, an economist at ING, said Bank officials would be concerned about the knock-on effects of higher oil prices on inflation.“Though the rise so far won’t make much difference to the inflation outlook – and officials commented that it had little bearing on this latest decision – we know some at the Bank are wary of a repeat of 2022, where a rise in energy prices turned into a much wider and more persistent services-driven inflation episode,” he said.The MPC, however, said the impact of US tariffs appeared to have been less significant than originally feared.
The chancellor, Rachel Reeves, has sought to take some of the credit for the Bank’s rate cuts since Labour came to power last summer, suggesting her prudent fiscal policy has allowed it to act,Labour will be hoping for further rate cuts later in the year to lower the cost of borrowing for companies and help kickstart economic growth,
Thames Water renationalisation plans being stepped up, says minister
The environment secretary, Steve Reed, has said the government is stepping up preparations for temporary nationalisation of Thames Water, indicating it will reject pleas from the company’s creditors for leniency from fines and penalties.Thames Water’s largest creditors control the utility and have made a bid to cut some of its debts and provide £5.3bn in new funding to try to turn it around.However, the creditors have said their plan needs considerable leniency from the water regulators Ofwat and the Environment Agency over fines for environmental failings.The Guardian this month revealed that the creditors had asked for immunity from prosecution for serious environmental crimes in return for taking on the company
Ministers set out plans to spend £725bn on UK infrastructure over 10 years
Ministers have pledged to spend £9bn a year on fixing crumbling schools, hospitals, courts and prisons over the next decade as part of the government’s infrastructure strategy.Darren Jones, the chief secretary to the Treasury, set out plans on Thursday to spend a minimum of £725bn over 10 years to boost UK-wide infrastructure and achieve a “national renewal”.Jones announced that £6bn a year would go to repairing hospitals in England, £3bn to fixing and upgrading schools and colleges in England and £600m to courts and prisons in England and Wales.The money will fund building improvements including removing crumbling reinforced autoclaved aerated concrete (Raac) in hospitals and strengthening safety and security in prisons.Jones told MPs: “Done properly it will result in tangible improvements to the fabric of our country, our local roads and high streets renewed so communities are even better places to live
Trump signs order granting TikTok a third reprieve from US ban
Donald Trump has signed an executive order to delay the ban or sale of TikTok for the third time. The order gives the Chinese-owned social media company another 90 days to find a buyer or be banned in the US.“I’ve just signed the Executive Order extending the Deadline for the TikTok closing for 90 days (September 17, 2025),” the president said in a Truth Social post.Trump’s first executive order giving TikTok a reprieve came on his first day in office – just three days after the supreme court ruled to uphold the ban. Trump issued the second executive order in April
UK Uber drivers’ earnings cut after secretive algorithm changes
Many Uber drivers are earning “substantially less” an hour since the ride hailing app introduced a “dynamic pricing” algorithm in 2023 that coincided with the company taking a significantly higher share of fares, research has revealed.The findings are in a study released on Thursday by academics at the University of Oxford. They analysed data provided by 258 UK Uber drivers responsible for 1.5m trips.Having initially taken a fixed 20% cut of the UK fares charged, which subsequently rose to 25%, Uber introduced dynamic pricing in 2023, an algorithm that variably sets pay for drivers and fares for passengers
Kirsty Coventry vows to stay humble as the first female president of the IOC
Kirsty Coventry has promised to not let power go to her head when she becomes the first female president of the International Olympic Committee next week.Her predecessor, Thomas Bach, would always stay in a suite paid for by the IOC at the five-star Lausanne Palace hotel, costing about £2,000 a night, whenever he was in the city. However, the Zimbabwean confirmed her family would not be following suit.“We won’t be staying in the Palace,” she said. “I really want my kids to grow up doing the same thing that I did, making beds and doing our chores and being kids
Royal Ascot 2025: Trawlerman nets biggest prize with Gold Cup triumph – live
5pm BRITANNIA STAKES HANDICAP bettingRaafedd 11/2Brave Mission 7/1La Botte 8/1Arabian Story 9/1Fifth Column 9/1Teroomm 11/1Fearnot 12/1Parole D’Oro 14/1Consolidation 18/1The Lost King 22/1Shout 22/125/1 BAR- 30 RunnersFull betting at Oddschecker: horse-racing/royal-ascot/17:00/winnerTrawlerman made every yard of the running in the Gold Cup to go one better than last year for John and Thady Gosden in the Royal Ascot highlight. Second to Kyprios 12 months ago, the Godolphin-owned seven-year-old took full advantage of the dual winner’s retirement under an excellently judged ride from William Buick.Illinois, who had stepped into Kyprios’ shoes for Aidan O’Brien, was well placed if good enough, but inside the final furlong Trawlerman (85-40 favourite) began to pull away and ran out an impressive seven-length winner. Dubai Future was third for Saeed bin Suroor in the Godolphin colours. PA Media5pm BRITANNIA STAKES HANDICAP previewThe usual huge field for the Britannia and obvious potential for a big-priced winner (although it has to be said that in recent years, there have been plenty in the 8-1 to 16-1 range just behind the market leader)
Bank of England warns of ‘elevated’ global uncertainty after leaving interest rates on hold – as it happened
Bank’s rate decision leaves frustrated Reeves praying for an August cut
Garmin Forerunner 970 review: the new benchmark for running watches
Israel-linked group hacks Iranian cryptocurrency exchange in $90m heist
Ben Stokes calls on England to adapt better ‘when we’re up against the wall’
Wallabies squad thin on playmakers may come back to bite Joe Schmidt