Bank of England Holds Rates Steady, Despite Slower Inflation
Why have Bank of England officials decided to maintain high interest rates?
Bank of England officials decided to maintain high interest rates at 5.25% because they believe it's working in cooling the labor market and reducing price pressures. They want to ensure that the risk of inflation overshooting their 2% target has dissipated before making any changes.
How do central banks worldwide respond to slowing inflation?
Central banks worldwide respond to slowing inflation by adjusting monetary policy, primarily through interest rate decisions. They may hold rates steady, as seen with the Bank of England, or cautiously cut rates, like the European Central Bank. The aim is to ensure inflation stays low and stabilizes, while avoiding potential overshooting of targets. Policymakers also consider economic indicators, such as labor market conditions and price pressures, in their decision-making process.
What is the U.S. Federal Reserve's projection for interest rate cuts this year?
The U.S. Federal Reserve projects one interest rate cut this year, down from an earlier projection of three cuts. This decision comes as inflation has slowed but remains elevated, and policymakers want to ensure sustained low inflation before lowering borrowing costs.