According to its governor, the Bank of England is ready to lower interest rates more significantly if the labour market begins to slow down. Andrew Bailey stated in a Times interview that “I do believe the path is downward” in terms of interest rates. At the Bank’s next meeting on August 7, interest rates which are now at 4.25% will be examined. Millions of people’s savings, credit card, and mortgage rates are impacted.
Mr. Bailey claimed in the Times interview that the UK economy was not expanding as quickly as it might, creating “slack” that could be used to lower inflation. Following UK Chancellor Rachel Reeve’s decision to raise employers’ national insurance contributions, the governor noted there were persistent indications that companies were “adjusting employment and hours” and offering lesser wage increases.
In April of this year, Reeves increased the national insurance rates for companies from 13.8% to 15%. The government anticipated that this increase would bring in £25 billion annually. Believe that interest rates are on the decline. “I firmly think that the direction is downward,” the governor declared.
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