What a difference a day makes. On Monday, Bank of England Governor Andrew Bailey spoke to The Times about interest rates, saying he “believe[s] the path is downward”. The only things that could get in its way would be inflation and growing unemployment.
Well, this morning brought the news that UK inflation jumped in June, eradicating the minor dip we saw in May.
This rise puts further pressure on the Bank of England’s Monetary Policy Committee to hold interest rates steady when they meet next month. The Bank is aiming for just 2% inflation and one of the few tools in its arsenal to achieve it is keeping interest rates high.
With unemployment data due to be published tomorrow, the interest rate cut and what it means for UK mortgage costs swings in the balance.
To secure certainty for your budget, lock in today’s GBP/EUR rate with a call to your account manager on 020 8003 4915.
It isn’t only the UK going through uncertain times. US inflation data published on Tuesday showed a significant 0.3% jump in June.
For months economists have said that it’s too soon to see the impact of US President Donald Trump’s tariffs, that companies have been eating their increased costs rather than passing them onto consumers. That grace period may now be ending.
If that’s the case, and prices continue to rise from here, US Federal Reserve Chair Jerome Powell has an even stronger case to hold interest rates steady, despite all the pressure from Trump to make cuts.
Meanwhile, over in Europe, while inflation is on currently on target, the threat of a 30% trade tariff with the US has sent the euro creeping downward.
As ever, the only certainty when it comes to money is that the markets are always changing.
