The Bank of England has left its interest rate unchanged at 5.25%, a day after inflation unexpectedly fell by more than expected.
The Bank’s monetary policy committee (MPC) voted 5-4 – the narrowest possible margin – to leave the cost of borrowing unchanged.
Up until the inflation data was released on Wednesday morning, markets had put an 80% probability on them raising the rate by a further quarter percentage point.
By this morning, that probability had sunk to just below 50%.
The decision brings to an end the longest successive period of “tightening” (a lift in the cost of borrowing) in recent Bank of England history – as the MPC raised rates in 14 successive meetings.
The last time the MPC voted to leave interest rates unchanged was in November 2021.
However, the fact that four members – Jon Cunliffe, Megan Greene, Jonathan Haskel and Catherine Mann – voted to raise the cost of borrowing might be seen as a signal that in the coming months the Bank may lift rates again.
The Bank also voted to continue its programme of reversing quantitative easing – the scheme whereby it creates money to buy government bonds and pump cash into the economy.
It is arguably the most exciting non-event in recent economic history.
Today, for the first time since late 2021, the Bank of England voted to leave borrowing costs unchanged.
Now in some senses, this is indeed a non-event. Interest rates are no higher than they were yesterday, but the cost of borrowing remains painfully high for many households.
Those due to refinance their mortgages in the coming months will still see a sharp increase in their rates compared with two or five years ago. The cost of living crisis is still with us.
It said over the next year it will sell off a further £100bn of bonds, cutting its total asset pile down to £658bn.
The Bank of England governor, Andrew Bailey, said: “Inflation has fallen a lot in recent months, and we think it will continue to do so.
“That’s welcome news. But there is no room for complacency. We need to be sure inflation returns to normal and we will continue to take the decisions necessary to do just that.”
Image: Andrew Bailey voted to maintain Bank rate at the 5.25% level
Ahead of the meeting, economists had been torn on whether the promise of falling inflation would outweigh the Bank’s concerns about rising wage inflation.
It has previously cited both of these statistics as key things to watch.
In the event, the five members who voted to leave rates unchanged judged “the latest developments meant that the judgement to keep Bank rate unchanged at this meeting rather than increase it was finely balanced” – according to the minutes of the MPC.
“Conditions were likely to warrant a restrictive policy stance being maintained until material progress had been made in returning inflation to the 2 per cent target.”
That signals that there is still a significant chance that Bank rate rises again, and that even if it doesn’t, it is unlikely to come down very quickly.
Image: Liverpool’s captain Virgil van Dijk. Pic: Reuters
Image: Liverpool’s Ryan Gravenberch and Cody Gakpo (right) arrive at the funeral of Diogo Jota and Andre Silva. Pic: PA
Jota, 28, leaves behind his wife of only 11 days, Rute Cardoso, and three young children.
His younger brother, 25, was an attacking midfielder for Penafiel in the second tier of Portuguese football.
Liverpool manager Arne Slot, captain Virgil Van Dijk and teammates including Andy Robertson, Conor Bradley, Ryan Gravenberch, Cody Gakpo, Curtis Jones, Darwin Nunez and Joe Gomez were seen at the service.
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Former teammates Jordan Henderson, James Milner and Fabinho were also there.
Van Dijk carried a red wreath with Jota’s number 20, while Robertson had a wreath featuring number 30, Silva’s number at Penafiel.
Image: Manchester United and Portugal player Bruno Fernandes. Pic: PA
Image: Liverpool’s captain Virgil van Dijk and Liverpool’s player Andrew Robertson. Pic: Reuters
Some of Jota’s teammates in the Portuguese national side also attended, including Bruno Fernandes, of Manchester United, Ruben Dias and Bernardo Silva, of Manchester City, Joao Felix and Renato Veiga, of Chelsea, Nelson Semedo, from Wolves, Joao Moutinho and Rui Patricio.
Ruben Neves was one of the pallbearers after flying in from Florida where he played for Al Hilal in the Club World Cup quarter-final on Friday night.
‘More than a friend’
In a post published on Instagram before the service, he told Jota he had been “more than a friend, we’re family, and we won’t stop being that way just because you’ve decided to sign a contract a little further away from us!”
Jota’s fellow Liverpool midfielder, Alexis Mac Allister, said on Instagram: “I can’t believe it. I’ll always remember your smiles, your anger, your intelligence, your camaraderie, and everything that made you a person. It hurts so much; we’ll miss you. Rest in peace, dear Diogo.”
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Porto FC president Andre Villas-Boas and Portugal national team manager Roberto Martinez were also in attendance.
‘With us forever’
Speaking after the ceremony, Martinez said the period since their deaths had been “really, really sad days, as you can imagine, but today we showed we are a large, close family.
“Their spirit will be with us forever.”
The service was private, but the words spoken by the Bishop of Porto, Manuel Linda, were broadcast to those standing outside the church.
He told Jota’s children, who were not at the service, that he was praying for them specifically, as well as their mother and grandparents.
“There are no words, but there are feelings,” he said, adding: “We also suffer a lot and we are with you emotionally.”
The brothers died after a Lamborghini they were travelling in burst into flames following a suspected tyre blowout in the early hours of Thursday morning.
No other vehicles are said to have been involved in the incident.
Liverpool have delayed the return of their players for pre-season following Jota’s death and players past and present paid tribute to him and his brother on social media.
Rachel Reeves has hinted that taxes are likely to be raised this autumn after a major U-turn on the government’s controversial welfare bill.
Sir Keir Starmer’s Universal Credit and Personal Independent Payment Bill passed through the House of Commons on Tuesday after multiple concessions and threats of a major rebellion.
MPs ended up voting for only one part of the plan: a cut to universal credit (UC) sickness benefits for new claimants from £97 a week to £50 from 2026/7.
Initially aimed at saving £5.5bn, it now leaves the government with an estimated £5.5bn black hole – close to breaching Ms Reeves’s fiscal rules set out last year.
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6:36
Rachel Reeves’s fiscal dilemma
In an interview with The Guardian, the chancellor did not rule out tax rises later in the year, saying there were “costs” to watering down the welfare bill.
“I’m not going to [rule out tax rises], because it would be irresponsible for a chancellor to do that,” Ms Reeves told the outlet.
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“We took the decisions last year to draw a line under unfunded commitments and economic mismanagement.
“So we’ll never have to do something like that again. But there are costs to what happened.”
Meanwhile, The Times reported that, ahead of the Commons vote on the welfare bill, Ms Reeves told cabinet ministers the decision to offer concessions would mean taxes would have to be raised.
The outlet reported that the chancellor said the tax rises would be smaller than those announced in the 2024 budget, but that she is expected to have to raise tens of billions more.
Sir Keir did not explicitly say that she would, and Ms Badenoch interjected to say: “How awful for the chancellor that he couldn’t confirm that she would stay in place.”
In her first comments after the incident, Ms Reeves said she was having a “tough day” before adding: “People saw I was upset, but that was yesterday.
“Today’s a new day and I’m just cracking on with the job.”
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“In PMQs, it is bang, bang, bang,” he said. “That’s what it was yesterday.
“And therefore, I was probably the last to appreciate anything else going on in the chamber, and that’s just a straightforward human explanation, common sense explanation.”
The family and friends of Diogo Jota and his brother Andre Silva have been joined by Liverpool stars past and present and other Portuguese players at the pair’s funeral near Porto.
Pictures below show the funeral at the Igreja Matriz de Gondomar church in the town of Gondomar near Porto. Click here for our liveblog coverage of the day’s events.
Image: Diogo Jota’s wife Rute Cardoso arrives for the funeral of him and his brother Andre Silva. Pic: Reuters
Image: Liverpool players Virgil van Dijk and Andrew Robertson arrive for the funeral. Pic: Reuters
Image: Van Dijk carried a wreath with Jota’s number 20 while Andrew Robertson’s had a 30 for Andre Silva. Pic: Reuters
Image: Liverpool captain Virgil van Dijk. Pic: Reuters
Image: Portugal player Ruben Neves arrives at the funeral. Pic: PA
Image: Liverpool’s Joe Gomez and manager Arne Slot arrive at the funeral of Diogo Jota and Andre Silva. Pic; PA
Image: Liverpool’s Ryan Gravenberch and Cody Gakpo (right) arrive at the funeral of Diogo Jota and Andre Silva
Image: Manchester City and Portugal player Bernardo Silva arrives at the funeral. Pic: AP
Image: The coffins are carried to the church. Pic: PA
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2:27
Miguell Rocha played with Jota for around ten years with Gondomar Sport Clube in Portugal.
Image: People line up to enter the church. Pic: AP
Image: Pallbearers carry the coffins of Diogo Jota and his brother Andre Silva
Image: Pic: Reuters
Image: Pic: AP
Image: People gather outside the Chapel of the Resurrection. Pic: Reuters
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0:22
The former captain was seen wiping away tears as he read messages and laid his tribute down.
Image: Fans pay their respects outside Anfield in Liverpool. Pic: Reuters
Image: A board with a picture of Diogo Jota outside Anfield Stadium. Pic: PA
Image: The coffins are carried to the church. Pic: PA