The governor of the Bank of England has signalled the UK is still on course for an interest rate cut as official figures show a further easing in the pace of price growth in the economy.
Andrew Bailey was speaking hours before the Office for National Statistics (ONS) revealed that the consumer prices index (CPI) measure of inflation slowed to 3.2% in the 12 months to March – the weakest level for two-and-a-half years.
That was down from the 3.4% figure measured the previous month but slightly above economists’ expectations.
ONS chief economist Grant Fitzner said of the shifts seen last month: “Once again, food prices were the main reason for the fall, with prices rising by less than we saw a year ago.
“Similarly to last month, we saw a partial offset from rising fuel prices.”
A further boost is expected to come from the Bank of England in the coming months as energy-driven inflation continues to ease, with a sharp reduction in CPI this month being widely tipped to take the main measure of inflation towards the Bank’s 2% inflation target.
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Some economists expect the Bank to begin the process of withdrawing its medicine to combat inflation in June.
An interest rate cut, from the current 5.25% level, would have the effect of trimming many borrowing costs that have exacerbated the squeeze on personal finances such as through higher mortgage rates.
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Mr Bailey told an International Monetary Fund event in Washington: “In the UK we’re disinflating at what I call full employment.
“I see, you know, strong evidence now that that process is working its way through.
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March: Bank of England governor: ‘We’re on the way’
“Our judgement with interest rates is ‘how much do we need to see now to be confident of the [disinflation] process’.”
But there is a growing school of thought that the Bank may have to hold off on a rate cut.
LSEG data shows a majority of financial market participants now expect a first rate cut in August or even September.
The worries include the threat posed by rising oil costs as the conflicts in the Middle East continue to evolve and the fact that UK wage growth is now running at levels almost double the inflation rate.
Another is emerging from the United States.
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US economy suffering ‘vibecession’?
There, the chair of its central bank has warned that the chances of an imminent interest rate cut have faded as the world’s largest economy runs hot.
The problem for the Bank of England in the wake of Jay Powell’s remarks on Tuesday is that any UK rate cut ahead of the Federal Reserve risks weakening the value of the pound against the dollar.
That would raise the cost of importing key goods priced in dollars such as commodities including oil – and stoke inflation.
Mr Bailey acknowledged: “The dynamics for inflation are rather different now, between Europe… and the US.
“I think there’s more demand-led inflation in the US than we’re seeing,” he added.
BBC chair Samir Shah has said there is “no basis for a defamation case and we are determined to fight this” – after Donald Trump said he would sue the corporation for between $1bn and $5bn.
It comes after the US president confirmed on Saturday he would be taking legal action against the broadcaster over the editing of his speech on Panorama – despite an apology from the BBC.
Image: Samir Shah said the BBC’s position ‘has not changed’. Pic: Reuters
In an email to staff, Mr Shah said: “There is a lot being written, said and speculated upon about the possibility of legal action, including potential costs or settlements.
“In all this we are, of course, acutely aware of the privilege of our funding and the need to protect our licence fee payers, the British public.
“I want to be very clear with you – our position has not changed. There is no basis for a defamation case and we are determined to fight this.”
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On Saturday, President Trump told reporters legal action would come in the following days.
“We’ll sue them. We’ll sue them for anywhere between a billion (£792m) and five billion dollars (£3.79bn), probably sometime next week,” he said.
“We have to do it, they’ve even admitted that they cheated. Not that they couldn’t have not done that. They cheated. They changed the words coming out of my mouth.”
The BBC on Thursday said the edit of Mr Trump’s speech on 6 January 2021 had given the “mistaken impression that President Trump had made a direct call for violent action”.
The broadcaster apologised and said the splicing of the speech was an “error of judgment” but refused to pay financial compensation after the US leader’s lawyers threatened to sue for one billion dollars in damages unless a retraction and apology were published.
Image: Deborah Turness. Pic: Reuters
Image: Tim Davie. Pic: PA
The Panorama scandal prompted the resignations of two of the BBC’s most senior executives – director-general Tim Davie and news chief Deborah Turness.
The broadcaster has said it will not air the Panorama episode Trump: A Second Chance? again, and published a retraction on the show’s webpage on Thursday.
A British man who hacked the X accounts of celebrities in a bid to con people out of Bitcoin, has been ordered to repay £4.1m-worth of the cryptocurrency, prosecutors say.
Joseph James O’Connor, 26, was jailed in the United States for five years in 2023 after he pleaded guilty to charges including computer intrusion, wire fraud and extortion.
He was arrested in Spain in 2021 and extradited after the country’s high court ruled the US was best placed to prosecute because the evidence and victims were there.
The Crown Prosecution Service (CPS) said on Monday it had obtained a civil recovery order to seize 42 Bitcoin and other crypto assets linked to the scam, in which O’Connor used hijacked accounts to solicit digital currency and threaten celebrities.
The July 2020 hack compromised accounts of high-profile figures including former US presidents Barack Obama and Joe Biden, and Amazon founder Jeff Bezos.
O’Connor and his co-conspirators stole more than $794,000 (£629,000) of cryptocurrency after using the hacked accounts to ask people to send $1,000 in Bitcoin to receive double back.
Prosecutor Adrian Foster said the civil recovery order showed that “even when someone is not convicted in the UK, we are still able to ensure they do not benefit from their criminality”.
The order, which valued O’Connor’s assets at around £4.1m, was made last week, following a freeze placed on the hacker’s property, which prosecutors secured during extradition proceedings.
Image: Barack Obama was one of the famous people to have their Twitter account hacked
Image: Elon Musk was among those targeted by scammers in a Twitter hack
A court-appointed trustee will liquidate his assets, the CPS said.
The attack also compromised the X (then Twitter) accounts of other high-profile figures including Tesla chief executive Elon Musk, investor Warren Buffett, and media personality and businesswoman Kim Kardashian.
The hack prompted the social media platform to temporarily freeze some accounts.
X said 130 accounts were targeted, with 45 used to send tweets.
The cobbled streets of Newport in Middlesbrough survive from the Victorian era.
The staggering levels of child poverty here also feel like they belong in a different time.
Six out of every seven children in Newport are classified as living in poverty.
Image: Six out of every seven children in Newport are classified as living in poverty
The measure is defined by the Child Poverty Action Group as a household with an income less than 60% of the national average.
More than half of children across the whole of the constituency of Middlesbrough and Thornaby East are growing up in poverty.
As a long-awaited new strategy on child poverty is expected from the government, much of the focus on tackling the problem has been placed on lifting the two-child cap on benefits for families.
Researchers say there is direct link between areas with the highest rates of child poverty and those with the highest proportion of children affected by that two-child cap.
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Image: The two-child benefit cap means Gemma Grafton and Lee Stevenson receive no additional universal credit for three-month-old Ivie
Mother-of-three Gemma Grafton said: “Maybe if families do have more than two children, give them that little bit of extra help because it would make a difference.”
Three months ago, she and partner Lee welcomed baby Ivie into the world. With two daughters already, the cap means they receive no additional universal credit.
“You don’t seem to have enough money some months to cover the basics,” said Lee.
“Having to tell the kids to take it easy, that’s not nice, when they’re just wanting to help themselves to get what they want and we’ve got to say ‘Try and calm down on what you’re eating’ because we haven’t got the money to go and get shopping in,” added Gemma.
Image: Katrina Morley, of Dormanstown Primary Academy, says lack of sleep affects concentration
Image: Tracey Godfrey-Harrison says parents ‘are crying that they’re failing’
The couple had to resort to paying half of the rent one month, something they say is stressful and puts their home at risk.
Those who work in the area of child poverty say they are engaged in a battle with child exploitation gangs who will happily step in and offer children a lucrative life of crime.
“Parents are crying that they’re failing because they can’t provide for their children,” said Tracey Godfrey-Harrison, project manager at the Middlesbrough Food Bank.
“In today’s society, it’s disgraceful that anyone should have to cry because they don’t have enough.”
In the shadow of a former steelworks, Dormanstown Primary Academy serves pupils in a community hit hard by the economic collapse that followed.
The school works with charities and businesses to increase opportunities for pupils now and in the future.
Katrina Morley, the academy’s chief executive, said: “A child who hasn’t been able to sleep properly can’t concentrate. They’re tired. We know that the brain doesn’t work in the same way. A child who is hungry can’t access the whole of life.
“When you face hardship, it affects not just your physiology but your emotional sense, your brain development, your sense of worth. They don’t get today back and their tomorrow is our tomorrow.”
Image: Dormanstown Primary Academy serves pupils in a community hit hard by the closure of a steel plant
Image: Barney’s Baby Bank founder Debbie Smith says local people ‘are struggling with food’
The school’s year six pupils see the value of things like the on-site farm shop for families in need.
They are open about their own worries, too.
Bonnie, 10, said: “I think that’s very important because it ensures all the people in our community have options if they’re struggling.
“It can be life-changing for families in poverty or who have a disadvantage in life because they don’t have enough money and they’re really struggling to get their necessities.”
Mark, also 10, said: “I worry about if we have nowhere to live and if we haven’t got enough money to pay for our home. But at least we have our family.”
They also see the homelessness in the area as the impact of poverty. “I think it actually happens more often than most people think,” said Leo, “because near the town, there’s people on the streets and they have nowhere to go.”
The school is one of many calling for the lifting of the two-child cap.
The need for life’s essentials has prompted more than 50 families to register for help at Barney’s Baby Bank in the last 11 months. Nappies, wipes, clothing, shoes, toys, are a lifeline for those who call in.
Founder Debbie Smith said local people “are struggling with food. They’re obviously struggling to clothe their babies as well. It’s low wages, high unemployment, job insecurity and that two-child benefit cap”.
“Middlesbrough does feel ignored,” she added.
A government spokesperson said: “Every child, no matter their background, deserves the best start in life. That’s why our Child Poverty Taskforce will publish an ambitious strategy to tackle the structural and root causes of child poverty.
“We are investing £500m in children’s development through the rollout of Best Start Family Hubs, extending free school meals and ensuring the poorest don’t go hungry in the holidays through a new £1bn crisis support package.”
But what is the message to those making the decisions from the North East?
“Come and do my job for a week and see the need and the desperation the people are in,” said Ms Godfrey-Harrison. “There needs to be more done for people in Middlesbrough.”