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November 07, 2024BANK OF ENGLAND MONETARY POLICY The Monetary Policy Committee (MPC) of the Bank of England voted to lower the Bank Rate by 25 basis points to 4.75%.
UK GDP grew 0.5% in Q2 2024, lower than expected in the August Monetary Policy report. MPC forecasts the annual GDP to be around 1.0% in 2024 and to rise to 1.5% in 2025.Household consumption had risen by 0.1% in the second quarter and is projected to grow 0.3% in quarter 3 and four. Business investment had strong growth in the first half of the year and is expected to grow 1.3% in Q3 and 0.2% in Q4. Housing investment has grown 4.7% in Q1 and fallen by 2.1% in Q2, however, housing investment is known to be volatile and sensitive to interest rates.
The MPC has examined that the labour market continues to loosen but it remains relatively tight by historical standards. Unemployment rates have remained stable recently and the vacancies to unemployment ration has fallen to around its 2019 level.
CPI inflation fell to 1.7% and is expected to increase to 2.5% by the end of the year as weakness in energy prices falls out of the annual comparison.
The MPC will continue to monitor for persistent inflationary pressures and use a gradual approach to removing policy constraints. The Bank of England cautions that monetary policy will need to remain restrictive for a period long enough to achieve the 2% inflation target sustainably over the medium term.
The next scheduled monetary policy meeting will be on December 19, 2024.
Source: Bank of England, Monetary Policy Summary; Monetary Policy Report
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