Bank Cut Rates, But Inflation’s Still on a Rollercoaster
In the latest monetary drama, the Monetary Policy Committee (MPC) tipped the scales in favor of a 0.25% rate cut, bringing the key rate down to 4.75%. Out of nine votes, eight were for the cut, leaving one dissenting voice urging the rates stay at the higher 5% mark. The market had already been betting on the lower figure before the big announcement.
Inflation: Thinking of a Temperature Rise
Economists now predict inflation to climb to roughly 2.5% by year‑end, up from the current 1.7% seen in September. That’s a subtle but noticeable uptick—just enough to keep the balloon from swelling too quickly, but still within the Bank’s comfort zone.
Quotes from the Hedge Fund World
- Nicholas Hyett, Investment Manager at Wealth Club, remarked: “After a whirlwind of political theatrics, the Bank’s decision to stick to the script and cut rates is like a breath of fresh air.” He acknowledges the growth remains “positive, but a little underwhelming” and calls out the Chancellor’s budget as a catalyst for a modest inflation bump.
- Hyett notes that next year’s GDP could see a ~0.75% lift compared to a scenario where rates had stayed snow‑king higher.
- He also warns that wage growth remains a wild card, especially with the budget’s minimum wage hike and National Insurance changes—these could keep service‑sector costs sticky if firms decide to pass the hikes onto consumers.
A Tale of Two Buses
The MPC minutes, while a normal chapter in the Bank’s ongoing story, aren’t exactly headline‑making. It seems the Bank is playing the waiting game, keeping most eyes on the next political act before deciding its next financial move.
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