The Bank of England may have lifted interest rates by less than a lot of people had been expecting up until recently – up by a quarter percentage point rather than a half – but for those with mortgages, the most striking thing from the trove of analysis they’ve published today isn’t about today but about tomorrow.
Because there are heavy hints dropped throughout the Bank’s Monetary Policy Report that it expects borrowing costs to stay high for a lot longer than many had anticipated.
Only a few months ago financial markets were betting that the Bank Rate – the official borrowing level set at Threadneedle Street – would be down to 4% by 2024 and 3.7% by 2025. Far higher than the post-financial crisis period but a fall all the same.
Now, those same markets think rates will still be at 5.9% in 2024 and at 5% by 2025. And rather than challenging those assumptions, the Bank has come as close as possible to reinforcing them.
This institution doesn’t provide explicit guidance about where it’s expecting interest rates to go; it prefers to drop hints. And the hint in the minutes alongside the decision today was about as heavy as you could get.
“The [Monetary Policy Committee] would ensure that Bank Rate was sufficiently restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term, in line with its remit.”
Higher for longer, in other words.
Why? Another clue is to be found elsewhere in the Bank’s forecasts today. It’s worth quoting at length: “Sharp increases in energy food and other import prices over the past two years have had second-round effects on domestic prices and wages.
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“These second-round effects are likely to take longer to unwind than they did to emerge and the Monetary Policy Committee has placed weight in its recent forecasts on the risk that they might persist for longer.
“The committee now judges that some of this risk may have begun to crystallise.”
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‘Interest rates are not going down anytime soon’
It fears, in other words, that the inflation cat is now out of the bag. And thus getting price rises to come down may involve considerably more work on its part than it previously anticipated. Higher for longer.
Which of course means pain for many households – especially those with mortgages and those renting (most landlords also have mortgages).
And unlike previous eras where most households were on floating rate mortgages and thus that pain was very quickly felt in their pockets, today that pain is being drip fed into the economy as two and five year fixed-rate mortgages gradually expire and are replaced with far more expensive monthly payments.
Again, that means the impact of these interest rate increases is going to be a long, drawn-out affair. And you can see the implications in the Bank’s economic forecast. The economy isn’t likely to face a recession, at least according to its central projection.
But it will essentially flatline – depressed by these higher rates – for three years, not showing meaningful growth until 2026.
It is a depressing prospect. Perhaps the best thing to hope for is that the Bank is wrong. This has happened before – indeed it’s already submitting to an independent inquiry into how it failed to foresee the recent spike in inflation, led by former Federal Reserve chairman Ben Bernanke.
It’s not altogether implausible that they fail to foresee a more meaningful economic recovery.
The son of former England footballer Stuart Pearce has died in a crash, his family has said.
Harley Pearce, from Marlborough in Wiltshire, was driving a tractor near Witcombe, Gloucestershire, on Thursday, when he was involved in a collision, police said.
The 21-year-old farming worker died at the scene, on the A417 Old Birdlip Hill in Witcombe, around five miles from Gloucester.
No other vehicles were involved, Gloucestershire Constabulary said. Emergency services were called to the scene of the incident at about 2.30pm on October 16.
Image: Stuart Pearce at last year’s FA Cup Final at Wembley. Pic: PA
Harley Pearce was 21 and worked in farming, according to reports.
‘Our shining star’
In a tribute posted on Facebook, Harley sister, Chelsea Pearce, said the family was “truly shocked and utterly heartbroken at the loss of our cherished son and devoted brother, Harley”.
He was, the family said, was a soul “who left an unforgettable imprint on all who knew him”.
“He was a golden boy with an infectious smile, and this shocking tragedy will leave a huge hole in the hearts of those who were fortunate enough to have known him.”
He had “a quiet, understated strength and deep kindness”.
The family said they were “so proud of the young man he had become, exhibiting a wonderful work ethic and entrepreneurial spirit in the farming industry.
“He will always be our shining star. Rest in Peace, our beautiful son and brother. You will never, ever be forgotten.”
What have police said?
Harley ran his own company, Harley Pearce Agricultural Service, talkSPORT said.
Gloucestershire Constabulary said on Thursday: “The driver of the tractor, a man in his 20s and from Wiltshire, was pronounced dead at the scene.
“His next of kin are aware and being supported by specially trained officers.”
The force is appealing for any witnesses or anyone with dashcam footage to contact them.
‘Tragic news’
Harley’s father, Stuart Pearce, played 78 times for England and was part of the Three Lions squads which reached the semi-finals of the 1990 World Cup and Euro 96, the FA said on its website.
He was later the head coach of the England Under-21s.
During a long club career, he made more than 400 appearances for Nottingham Forest, many of them as captain, during a 12-year spell at the City Ground.
He later managed the club, as well as another former club, Manchester City.
Pearce currently works as a pundit on talkSPORT, which said on its website that Harley and Chelsea were the two children he had with his ex-wife Liz.
Presenter Jim White said during a broadcast on Monday that “everybody here on this show and at talkSPORT sends our heartfelt condolences to the family of Stuart Pearce after that tragic news we’ve just heard”.
After years of campaigning, bereaved families in Leeds have been told they will get a fully independent inquiry into local maternity services.
The inquiry was announced by Health Secretary Wes Streeting who said he was “shocked” that the families faced “repeated maternity failures… made worse by the unacceptable response of the trust”.
Despite running one of the largest teaching hospitals in Europe, Leeds Teaching Hospitals NHS Trust “remains an outlier on perinatal mortality”, according to official data.
Image: Leeds was downgraded to “inadequate” in June by the Care Quality Commission, over serious risks to women and babies
Grieving families have welcomed the launch of the inquiry.
In 2023, an inquest concluded Fiona Winser-Ramm and Daniel Ramm’s first baby, Aliona, died in 2020 as a result of neglect from medical staff.
“When after our daughter died, we were told that they had never seen anything like it before. And we believed it initially,” said Ms Winser-Ramm.
Image: Fiona Winser-Ramm’s baby died in 2020 after failings by staff
“We believed that we were the first people, the only people that this had ever happened to. And in the depths of our despair and grief, we needed to find other people that understood this, that were the same as us,” she added.
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Mr Ramm said the inquiry had been “a long time coming”.
“We have, as a group of families, spent years trying to essentially expose what the problems have been at least that we’ve known have existed all along,” he said.
Image: Daniel Ramm says the inquiry has been ‘a long time coming’
Lauren Caulfield’s baby Grace was stillborn in 2022 and an investigation found failings in her care.
“We shouldn’t… as bereaved, grieving parents have to do this [campaigning] for so many years. [It’s] quite a relief to know that, you know, we don’t have to keep fighting,” she said.
Image: Bereaved parent Lauren Caulfield is relieved, saying ‘we don’t have to keep fighting’
Mr Streeting said: “This stark contradiction between scale and safety standards is precisely why I’m taking this exceptional step to order an urgent inquiry in Leeds.
“We have to give the families the honesty and accountability they deserve and end the normalisation of deaths of women and babies in maternity units.
“These are people who, at a moment of great vulnerability, placed their lives and the lives of their unborn children in the hands of others – and instead of being supported and cared for, found themselves victims.”
Brendan Brown, chief executive of Leeds Teaching Hospitals NHS Trust, said: “I want to start by offering the families an unreserved apology, not only for their experience, but also for the fight that they’ve had in raising these concerns.
“And I want to assure them of our commitment to engage with the independent inquiry openly, honestly and transparently.”
Image: Chief executive of the Trust, Brendan Brown, has offered families an unreserved apology
The families are waiting for the terms of reference of the investigation to be confirmed, but feel the police should be involved.
They also called for it to be chaired by midwife Donna Ockenden, who is heading the independent review of maternity services at the Nottingham University Hospitals NHS Trust.
Leeds now joins a growing list: Morecambe Bay, Shrewsbury, East Kent, and the ongoing Nottingham inquiry, all uncovering shocking failures in maternity care across England.
The King has visited the scene of a fatal attack at a synagogue in Manchester.
The monarch was greeted by Rabbi Daniel Walker when he arrived at the Heaton Park Hebrew Congregation Synagogue.
He spent a few minutes at an outside memorial area next to the synagogue, where flowers and messages have been left by those paying their respects.
Image: Rabbi Daniel Walker and the King
Image: Pics: PA
It was the King’s first official engagement since Prince Andrew‘s decision to relinquish his titles under intense public scrutiny following allegations he sexually abused Virginia Giuffre. The prince vehemently denies the allegations.
Andrew also faces the Metropolitan Police looking into reports he asked an officer to help with an attempted smear campaign against Ms Giuffre.
Image: Pics: PA
During the attack at the Manchester synagogue on the Jewish holiday of Yom Kippur, father-of-three Melvin Cravitz, 66, was killed, along with Adrian Daulby.
Mr Daulby, 53, was believed to have been inadvertently shot by police as he ran to block the synagogue doors to stop the attacker getting inside to continue his knife rampage.
Image: (L-R) Victims Adrian Daulby and and Melvin Cravitz. Pics: Family handout/Greater Manchester Police
He drove his car at Jews gathering at the Heaton Park Hebrew Synagogue for the holy day of Yom Kippur, then attacked others with a knife and tried to storm the synagogue, wearing a fake suicide belt, before armed police shot him dead.
Last week, Yoni Finlay, who is believed to have been hit by a police bullet during the attack and underwent seven hours of surgery, was discharged from hospital.
He reportedly helped barricade the doors at the synagogue.
Greater Manchester Police said two other men injured in the attack, a security guard who was hurt when the attacker rammed his car outside the synagogue and a volunteer who was stabbed, remain in stable conditions.