Moneyfarm’s Post

[Capital at risk] This morning’s data showed that headline inflation in the UK rose to 2.2% in July, up from 2.0% in June. The reading came in below the market expectations of a 2.3% growth, moving back above the Bank of England’s 2.0% target. “It is the first time CPI has risen since February 2023 after the BoE raised interest rates to 16-year highs to bring down inflation. The Bank of England acknowledged the battle against inflation is not done” comments our Chief Investment Officer, Richard Flax. “Monetary policy will need to stay restrictive for an extended period until the risks of inflation returning sustainably to the 2% target in the medium term have diminished further” concludes Flax. Let’s take a step back, what is inflation and what causes it? Follow up here: https://lnkd.in/e5jjfKG3 #CPI #BoE #investments #savings #monetarypolicy #economy #wealthmanagement #moneyfarm

Inflation has dipped to 2.3% in April, down from 3.2% in March. This unexpected drop is a welcome sign. And now we finally have a General Election date... While a reduction in the Bank of England base rate was already on the horizon, the speed and depth of this potential cut may be greater than anticipated. This could lead to lower borrowing costs for businesses, freeing up capital for investment and growth. The Bank of England will be closely monitoring inflation data to determine the appropriate course of action for interest rates. While this initial drop is positive, it's important to remain cautious as the election impact and global economic factors continue to evolve. Share your thoughts! Are you feeling more optimistic about the economic outlook and its impact on farms and rural businesses?  #ruralmortgages #ruralbusiness #inflation #banking #economicoutlook  

Interest rates held at highest level for 16 years…despite the target inflation rate of 2% being reached and likely to fall further. The Bank of England has missed a real opportunity to create some much needed positive sentiment at a time of when the cost of living crisis is worsening and many industrial sectors, particularly construction, are in dire shape. There is now ‘expert consensus’ talk of the MPC reducing the base rate at the next August meeting; what exactly is ‘safe’ about a reduction in August that is not in June? Let us not forget hiking interest rates was supposed to divert liquidity from overspending consumers to saving. But with millions already in near poverty and the huge ‘supplier driven’ energy cost spike making matters considerably worse….this left very little ‘excess liquidity’. Hence the cost of living crisis worsening and lasting damage being wrought on key industrial sectors such as construction. This is causing growing mental health issues relating to anxiety and financial stress. Why is this considered an acceptable price to pay to limit inflation? In this context, with the economy facing a ongoing crisis due to high base rates, positive sentiment around a rate reduction would carry significant weight. Even though the full financial impact takes time, the psychological boost from a rate cut can be substantial. People perceive it as a positive signal, certainly boosting confidence. I am becoming more convinced that personal ego rather then substantive reasoning is now the dominant force in the repetitive comments I have read. It is becoming more obvious that too many are opting to conform with the consensus view rather than engage in critical thinking … also known as ‘groupthink’. I suggest this is a very bad decision for the BoE/MPC to keep in line with the overly negative ‘consensus view’ and not use this platform of inflation plunging to 2% to announce a 0.25% reduction in the base rate today. #BankofEngland #economy #crisis #banking #inflation #MPC #construction

📉 Breaking News: Inflation Hits 1.7% – The Lowest Since April 2021! Inflation has just dropped to 1.7%, falling below the government’s target for 2024. This marks the lowest inflation rate we’ve seen since April 2021 and could signal a turning point for interest rates. 💡 What’s next? With inflation cooling, many are asking: will we see further interest rate cuts, or will the Bank of England hold at 5%? While lower inflation typically leads to rate cuts, external uncertainty could reverse that. 🌍 Could the Middle East Conflict Reverse the UK’s Inflation Drop? While UK inflation has dropped to 1.7%, the ongoing war in the Middle East could threaten this progress. With energy prices rising and supply chains under pressure, we may see inflation start to climb again in the coming months. 💡 Key factors to watch: • Oil Prices: Disruptions in oil production could send energy costs soaring, impacting businesses and households alike. • Supply Chain Issues: Delays and rising costs in global shipping routes, especially through key channels like the Suez Canal, could drive up prices for essential goods. • Interest Rate Pressures: If inflation rises again, the Bank of England may be forced to reconsider future rate cuts, keeping borrowing costs high. As uncertainty grows, businesses need to stay agile. At Bluestar, we’re here to help you navigate these volatile times with tailored financial solutions. #inflation #economicnews #energyprices #MiddleEast #businessfinance #UKeconomy #Bluestar #interestrates

BoE to keep the same interest rate, despite the 2% inflation target: The Bank of England (BoE) has a mandate to keep inflation low and stable, with a target of 2%. This target helps everyone plan for the future. If inflation is too high or it moves around a lot, it's hard for businesses to set the right prices and for people to plan their spending. However, the BoE aims to bring inflation to 2% over the "medium term", rather than targeting it immediately This means that even if inflation hits the 2% target, the BoE might not immediately adjust interest rates. In the current scenario, the Consumer Prices Index (CPI) dropped to 2% in May, down from 2.3% in April¹. Despite this, the BoE is set to leave interest rates unchanged at the 16-year high of 5.25%. This decision could be influenced by several factors: 1. Economic Conditions: The BoE's Monetary Policy Committee (MPC) sets monetary policy in a way that helps to sustain growth and employment. If the economy is showing signs of slowing down, the BoE might choose to keep interest rates steady to encourage spending and investment. 2. Future Inflation Expectations: Policymakers on Threadneedle Street have pointed to the higher rates of core inflation and service-sector inflation as signs that price rises could re-accelerate. If they expect inflation to rise above the 2% target in the future, they might choose to keep interest rates high as a preventative measure. 3. Global Economic Factors: The MPC also considers international economic conditions when setting interest rates. If there are uncertainties or risks in the global economy, the BoE might choose to keep interest rates steady as a precaution. #BoE #inflation #uk #markets #economy #elections #FTSE

What caused the recent jump in inflation? It increased from 1.7% in September to 2.3% in October. This reflected a 0.1 percentage point contribution from core inflation, close to zero from food inflation, 0.015 percentage points from higher alcohol and tobacco prices, and a 0.5 percentage point contribution resulting from a lower annual rate of fall in energy prices. Despite the slight uptick in the annual core inflation rate, it is still significantly lower than it was a year ago, providing some encouragement to the Bank of England to reduce interest rates still further during 2025. However, the concern for monetary policymakers before they decide to cut rates again will be the potential upward pressures on inflation from measures in the Autumn Budget 2024. The course they chart will be affected by how these and other economic factors (both domestic and international) play out over the course of the next six months or so. Have you noticed much inflation recently? #costreduction #procurement #accountancy #business #icaew #nonexecutivedirector #ned

Amid growing recession concerns, the Bank of England (BoE) is anticipated to reduce interest rates in 2025 to support economic growth. Analysts surveyed by *The Times* predict at least four rate cuts, potentially lowering the base rate from 4.75% to 3.75% . Similarly, Investec forecasts a reduction to 3.75% by the end of 2025 . These projections are influenced by factors such as persistent inflationary pressures, particularly in the services sector, and global economic uncertainties, including potential U.S. trade tariffs . The Organisation for Economic Co-operation and Development (OECD) notes that recent fiscal measures may lead to higher inflation, suggesting that interest rates could remain elevated for a longer period . The BoE's Monetary Policy Committee (MPC) remains divided on the timing and extent of rate cuts. In December 2024, the MPC voted to maintain the base rate at 4.75%, with three out of nine members advocating for a 0.25 percentage point reduction . This division underscores the complexity of balancing the need to stimulate economic growth against the imperative to control inflation. Market expectations align with these forecasts, with financial markets pricing in approximately 0.53 percentage points of rate cuts for 2025 . However, the exact trajectory of interest rates will depend on forthcoming economic data, inflation trends, and global economic developments. In summary, while the BoE is expected to lower interest rates in 2025 to mitigate recession risks, the pace and magnitude of these cuts will be carefully calibrated to address ongoing inflationary concerns and external economic factors.

“UK Inflation Rises to 2.3% in October, Clouds December Rate Cut Prospects” UK inflation surged to 2.3% in October, surpassing both the Bank of England’s 2% target and expectations of 2.2%. This marks a significant jump from September’s 1.7%, driven largely by increased energy costs. Core inflation (excluding energy, food, alcohol, and tobacco) edged up to 3.3% from 3.2%, while services inflation climbed slightly to 5.0%, highlighting persistent domestic price pressures. This combination of higher headline, core, and services inflation adds complexity for policymakers at the Bank of England (BoE) as they approach the December 19 interest rate decision. A key driver of this spike was the October hike in the energy price cap, with broader inflationary pressures stemming from global trade disruptions, labor market constraints, and recent fiscal policy. Finance Minister Rachel Reeves' Autumn Budget introduced £40 billion in tax hikes along with more government spending, a move which would sustain inflation above the BoE’s 2% target well into 2025. The latest data casts doubt on a December rate cut, with markets now pricing only a 14% chance of a reduction. BoE Governor Andrew Bailey has reinforced the bank’s cautious stance, emphasizing a "gradual" approach to rate changes. Investors anticipate borrowing costs will remain elevated, possibly through 2025, amid ongoing global uncertainties such as U.S. trade policies under President-elect Donald Trump and a tight domestic labor market. Despite some signs of easing pressures, such as falling factory gate prices, the BoE's outlook for inflation to rise near 3% by late 2025 suggests monetary easing will proceed cautiously. With inflation exceeding forecasts, could the Bank of England pivot toward a prolonged pause, or will economic pressures force an unexpected shift in the interest rate cycle? Share your thought below! #uk #bankofengland #monetarypolicy #interestrates #economy #credit

Today the ONS (Office for National Statistics) has released the latest UK inflation data, showing that CPI stuck at 2.2% in the year to August – the same as in July. As investment strategists anticipate the Bank of England MPC’s decision on UK interest rates tomorrow, it seems as if today’s data hasn’t given much clout to those who would favour a further cut. #Inflation #UKInterestRates

🔲 Interest Rate Cuts on the Horizon: US Fed and UK BOE Set to Shift Policy! 🔳 This week’s interest rate decisions from the Federal Reserve Board and the Bank of England are shaping up to be pivotal moments for the global economy. Latest market insights suggest both central banks may be preparing to cut rates, signaling a potential shift in monetary policy amid easing inflationary pressures. 🔳 In the US, the Federal Reserve has been navigating a delicate balance between controlling inflation and maintaining economic growth. After a series of aggressive rate hikes, recent data indicates that inflation may be cooling faster than expected. This has opened the door for the Fed to consider a rate cut, which could provide relief for businesses and consumers grappling with high borrowing costs. 🔳 Across the Atlantic, the Bank of England faces similar circumstances. With inflation easing and economic growth faltering, the pressure is mounting to reduce rates and support the UK’s economic recovery. Analysts believe that a rate cut could help address the rising cost of living and provide much-needed stimulus for a slowing economy, particularly in the post-Brexit landscape. 🔳 If both the Federal Reserve and Bank of England opt for rate cuts, this could mark a major turning point in the global monetary policy environment, with broad implications for businesses, investors, and households. Lower rates could ease borrowing conditions, stimulate investment, and potentially reinvigorate economic growth across both markets. #InterestRates #FederalReserve #BankOfEngland #RateCuts #Inflation #MonetaryPolicy #USEconomy #UKEconomy #EconomicGrowth #GlobalMarkets #InvestmentStrategies #BusinessFinance