The Bank of England will say whether it cuts interest rates today. Don’t hold your breath.
Rachel Reeves and Ed Miliband are to blame for higher inflation and interest rates (Image: Getty)
The Bank’s rate-setting monetary policy committee (MPC) announces its latest decision at midday. It has cut base rate five times since last August, most recently last month when it trimmed rates by 0.25% to 4%.
However, that was a cliff-edge call, with four of the nine members voting to maintain bank rate at 4.25%. Today’s decision won’t be nearly so close. Economists expect the MPC to sit tight, not just today but at its final two meetings this year on November 6 and December 18.
Markets now put the chances of another cut in 2025 at just one in three. That’s grim news for households, mortgage borrowers and businesses struggling with the cost of debt.
Instead of light at the end of the tunnel, the gloom will drag on.
And we can thank Chancellor Rachel Reeves and Energy Secretary Ed Miliband for that. Their idiotic policies have kept inflation high and made further rate cuts impossible.
It’s a completely different story elsewhere. Yesterday the US Federal Reserve cut its benchmark rate to 4.25%. It can do that, with US inflation at 2.9% in August.
More importantly, the Fed also signalled two further interest rate cuts this year, which could bring US rates down to 3.75%.
The European Central Bank trimmed its main refinancing rate to 2.15%, with eurozone inflation steady at 2%. Other central bankers have room to act. The Bank of England does not. Thanks to Reeves and Miliband.
We learned yesterday that UK inflation was stuck at 3.8% in August. The Bank of England actually expects it to RISE in September, to 4%.
Worse, the prices of essentials are rising fastest. Food price inflation is now running hot at 5.1% year-on-year, while energy bills are set to climb by another £68 in April to an average of £1,823, according to Cornwall Insight. That follows a £35 jump in October, at a time when wholesale gas prices are FALLING.
What on earth is going on? Tom Clougherty of the Institute of Economic Affairs is clear: “Rising prices are in large part being driven by government policy in the form of higher taxes and regulatory costs.”
In short, we’re paying the price for ministers’ policy mistakes.
Reeves is a one-woman inflation-generating machine. She handed public sector workers inflation-busting pay rises, hiked employers’ national insurance to 15%, and cut the salary threshold at which they pay to just £5,000. At the same time she drove up the minimum wage by 6.7%.
Food, retail, hospitality and other low-wage sectors have simply passed these costs on, leaving consumers facing higher prices in supermarkets, shops, pubs and restaurants.
Households are also picking up the tab for Miliband’s net zero madness.
By forcing fossil fuels out faster than the system can bear, Miliband is loading the costs of new grid infrastructure and renewable subsidies onto gas and electricity bills. There’s a reason he’s been labelled the most dangerous man in Britain.
Cash-strapped pensioners are hit hardest, since they spend a bigger slice of their income on food and heating.
Instead of easing the pressure, Reeves and Miliband are piling more on, leaving Britain with inflation stuck far above the US and Europe.
Reeves desperately needs lower interest rates to cut UK borrowing costs and create some fiscal headroom ahead of her nightmare Budget. She won’t get them. And as I’ve just shown, she doesn’t deserve to either. Sadly, it’s the rest of us who’ll pay the price. Every time we buy food or turn on the lights.
