Interest rate frozen – but it’ll still be painful if you have a mortgage
It is arguably the most exciting non-event in recent economic history.
For 14 successive monetary policy meetings, the Bank of England raised its official interest rate – all the way from 0.1% up to 5.25%.
Today, for the first time since late 2021, it voted to leave borrowing costs unchanged.
Reaction to BoE’s decision – latest updates
Now in some senses, this is indeed a non-event. The Bank interest rate is no higher than it was 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.
And this gets to a critical point underlying the Bank’s thinking. In much the same way as a fall in inflation doesn’t mean the cost of living crisis is over – prices are still rising fast, but not quite as fast as previously – freezing interest rates doesn’t mean the impact they have will diminish.
Indeed, at their current level, the Bank believes that interest rates should be considered “restrictive” – so even keeping the Bank rate at 5.25% is delivering medicine to the economy, bearing down on spending and, the Bank hopes, inflation.
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Sky’s Ed Conway reacts to rate hold
Even so, today’s decision is the most convincing signal yet that the Bank may now be close to, or even at, the peak for the interest rate. The decision today was so finely balanced that many will wonder whether it will still go ahead and hike the rate at its next meeting.
But in leaving borrowing costs where they are, the Bank is following a similar path to the European Central Bank – which just raised rates but hinted that might be that – and the Federal Reserve, which also left US rates on hold earlier this week. All around the world, central banks are coming to the conclusion that they may now be at the peak for interest rates.
But that raises a further question: what now? Investors are betting that the Bank may start cutting borrowing costs as soon as next year. But insiders at Threadneedle Street aren’t so sure. They suspect rates may have to stay higher for longer, both to bring inflation down and to ensure it stays down. Moreover, they warn that the days of zero interest rates may be gone for good.
A body has been found in the search for 23-year-old runner Jenny Hall.
She was last seen leaving her home in Barracks Farm, County Durham, in her car just after 3pm on Tuesday.
Police said there are not thought to be any suspicious circumstances after a body was found in a very remote area in Teesdale on Sunday morning, five days after she went missing.
Jenny Hall went missing on Tuesday. Pic: Durham Constabulary
“We’re sorry to report that officers searching for missing woman Jenny Hall, have sadly found a body,” Durham Constabulary said in a statement.
“Officers carried out an extensive search alongside specialist partners and have been working around-the-clock to locate Jenny after she went missing on February 18.
“The body was found in a very remote area in Teesdale just after 9.30am today.
“Formal identification has yet to take place. Jenny’s family have been notified and are currently being supported by specialist officers. They have asked for privacy at this devasting time.
“It is not believed there are any suspicious circumstances and a file will be prepared for the coroner.”
A major police search was launched after Ms Hall’s disappearance.
Her car, a red Ford Focus, was found on Wednesday parked on the B6278, near remote moorland between Eggleston and Stanhope.
Mountain rescue teams, specialist drones and sniffer dogs had been combing the Hamsterley Forest and the surrounding areas, where there are a number of running trails, this week.
Digital intelligence officers also carried out extensive inquiries into Ms Hall’s mobile phone, smart watch and running apps.
A fresh amber weather warning for heavy rain has been issued by the Met Office – with much of the UK already on alert for high winds and showers.
Northern Ireland, Scotland and the UK’s west coast and the Midlands have yellow warnings for wind on Sunday – meaning the possibility of transport delays and short-term power cuts.
There are also rain warnings in place for several parts of western UK.
The new amber warning has been issued for rain in south and central Wales and is in force from 3pm on Sunday to 6am on Monday.
An amber warning means danger to life from floodwater, homes and businesses are likely to be flooded, and there is a chance some communities will be cut off.
Winds across the west of the UK will increase throughout the morning with gusts up to 70mph in exposed areas, the Met Office said.
Zoe Hutin, a meteorologist at the forecaster, said Sunday is expected to be the “worst day” before conditions improve.
“The wind warning itself for the mainland UK ends at 6pm, but we can expect to continue to see quite blustery conditions even into the evening as the mainland rain itself pushes through.”
She added: “By the time people get up on Monday, we’ll still have some of the residual rain from that front in the far south-east of the country, and quite cloudy across England as well.
“But actually elsewhere, it could be a decent start.”
The Met Office’s yellow weather warnings for much of England and Scotland came into force at 6am and are expected to run until 6pm on Sunday.
A separate yellow warning for Northern Ireland came into force at 3am and runs until 3pm.
Rain and high winds are expected across the west of the UK
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People who have noticed some slightly higher temperatures the last couple of days may be dismayed at the latest predictions.
“Through the week, those temperatures are trending back down,” Ms Hutin said.
“And so it will be getting cooler each day, but they will actually just be recovering to around average for the time of year. So it won’t be cold.
“It will just be returning back to where we would expect to be for this time of February.”
Sir Keir Starmer has said the United States “is right” about the UK and Europe needing to take more responsibility for defence and security.
The prime minister, speaking at the Scottish Labour conference in Glasgow on Sunday, said he is clear Britain “will take a leading responsibility” in protecting the continent.
“Instability in Europe always washes up on our shores,” he said.
“And this is a generational moment. I’ve been saying for some time that we Europeans – including the United Kingdom – have to do more for our defence and security. The US is right about that.”
He added “we can’t cling to the comforts of the past” as it is “time to take responsibility for our security”.
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Donald Trump sparked an emergency meeting of European leaders this week after he said European NATO members should spend more on defence, while the US should spend less.
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Sir Keir has said he will set out a path for the UK to spend 2.5% of GDP on defence, up from the current 2.3%, but has not indicated when that will be.
It is believed he may announce the details when he visits Mr Trump in Washington DC on Thursday, bringing forward the announcement that was expected in the spring when a defence spending review is published.
The prime minister reiterated the UK will “play our role” if required in Ukraine following a peace agreement after he earlier this week said the UK would send troops to be part of a peacekeeping force.
Sir Keir will meet Donald Trump in the White House on Thursday. Pic: AP
However, his comments caused a row with Germany and Italy who said it was premature to commit to boots on the ground, although France agreed with the UK.
Sir Keir said: “As we enter a new phase in this conflict, we must now deepen our solidarity even further.”
He added: “There can be no discussion about Ukraine without Ukraine.
“And the people of Ukraine must have long-term security.”
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This week has seen US officials meet their Russian counterparts in Saudi Arabia to discuss Ukraine – which has been met with indignation by Ukrainian President Volodymyr Zelenskyy as none of his team were invited.
No Europeans were invited either, sparking concern the US is pandering to Vladimir Putin.
Sir Keir has promised Mr Zelenskyy he will make the case for safeguarding Ukraine’s sovereignty when he meets with Mr Trump, who has called the Ukrainian president a dictator.
Mr Trump also said Sir Keir and French President Emmanuel Macron, who will visit the White House too this week, “haven’t done anything” to end the war.
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