MercoPress. South Atlantic News Agency

UK economy on flat growth track, with decreasing inflation, BoE report

Governor of BoE Andrew Bailey said “we'll be watching closely to see if further rate increases are needed.”

The UK economy is on flat growth for a couple of years, while government forecasts of greater activity vanish, and the Bank of England could still rise interest rates further. In effect the BoE has warned rates will remain high for some time or even rise higher. Rate currently stands at 5,25%, the highest in fifteen years.

Up until September, the Bank of England had raised rates 14 times in a row to tame soaring inflation, which has been squeezing household budgets.

It has led to increases in mortgage payments, squeezing borrowers, but also resulting in higher savings rates.

But the BoE also anticipated that it expects inflation to fall sharply in the months ahead.
Nevertheless the Governor of BoE Andrew Bailey said “we'll be watching closely to see if further rate increases are needed.”

The Bank expects it to continue to fall as energy and food price rises ease and predicts that it will remain at around 3% throughout next year, above the 2% target.

But if the Israel-Hamas conflict spreads throughout the Middle East, it could have a knock-on effect on energy prices.

“It is a risk, clearly, that any sort of wider disturbance in the Middle East can obviously threaten energy prices, both oil and gas, and we watch that very carefully. So yes, we do see that as a risk going forwards.”

While the Bank is not predicting a recession, it expects zero growth from now, across the whole of next year - when there is likely to be a general election - and into 2025. “UK economic growth is slowing,” the Bank said.