The Bank of England has left interest rates unchanged at 5.25 per cent for the second month in a row, as economists warn of a possible recession.
The BoE on Thursday emphasised that interest rates, now at a 15-year high, would not be falling any time soon.
"We've held rates unchanged this month but we'll be watching closely to see if further rate increases are needed," said the bank's governor, Andrew Bailey. "It's much too early to be thinking about rate cuts."
The BoE's Monetary Policy Committee (MPC) voted by six to three to keep interest rates on hold, which was in line with predictions.
"The MPC's latest projections indicate that monetary policy is likely to need to be restrictive for an extended period of time," the BoE said.
"Further tightening in monetary policy would be required if there were evidence of more persistent inflationary pressure."
A year ago UK inflation topped 11 per cent, but as the effect of 14 increases in interest rates started to feed through, inflation was down to 6.7 per cent in September, albeit still more than three times the BoE's target of 2 per cent.
Nonetheless, when the BoE met in September, it downgraded its outlook for the third quarter of this year, predicting that gross domestic product would rise by only 0.1 per cent, compared with the 0.4 per cent increase it had forecast a month earlier.
The BoE now expects UK economic growth to be flat next year and a sluggish 0.25 per cent in 2025.
"The decision to leave interest rates unchanged at a time when recession fears are on the rise and fresh conflict in the Middle East risks derailing the energy market indicates the central bank is nervous about increasing borrowing costs for households and businesses," said Alice Haine, personal finance analyst at Bestinvest.
"Whether this is the end of interest-rate rises is unclear, with the BoE monitoring inflationary pressures carefully, while the dampening effects from 14 rate rises between December 2021 and August this year continue to feed through into the economy."
Business groups gave the decision a cautious welcome but warned that the longer interest rates remain at 15-year highs, the more damage will be done to already struggling companies and households.
“The decision from the Bank of England to hold rates again for a second month running will be welcome news to hard-pressed households and businesses dealing with higher borrowing costs," said Anna Leach, deputy chief economist at the Confederation of British Industry.
“However, with the backdrop of high inflation, wage growth still well above levels consistent with the inflation target and given services inflation actually rose in September’s data, monetary policy will need to remain tight for some time in order to decisively drive inflation back to target."
With the possibility that any further rises will tip the UK into a recession, many analysts feel UK interest rates have now peaked.
"It’s far from surprising that the majority of policymakers want the economy to take a breather from this painful cycle of rate hikes," said Susannah Street at Hargreaves Lansdown.
"The potential for oil prices to shoot higher remains a worry, but not a major concern right now. So, barring further shocks, it looks highly likely we have hit the peak in the cycle, but cuts are still not expected until the second half of next year.”
Mortgage time bomb
Meanwhile, Britain's opposition Labour Party on Thursday published analysis indicating 630,000 more homeowners would be hit by higher borrowing costs before local elections next year.
The analysis, based on figures from the Office for National Statistics, claimed more than 3,400 households will be forced to remortgage each day until the beginning of May, as they come off their fixed-rate deals.
The new deals will have significantly higher rates of interest, with a profound effect on household budgets. However, for many analysts, the BoE's decision to leave interest rates on hold will come as a slight relief.
"While many expect interest rates to stay higher for longer, as thousands more borrowers come off low fixed rates into the current environment, this could have a profound effect," Andrew Montlake, a mortgage broker at Coreco, told Newspage on Thursday.
"The bank is walking a narrow tightrope now and its next decisions will prove crucial not just for borrowers and the economy at large, but also weigh in on the upcoming general election next year."
The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
COMPANY%20PROFILE
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Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
UAE currency: the story behind the money in your pockets
2.0
Director: S Shankar
Producer: Lyca Productions; presented by Dharma Films
Cast: Rajnikanth, Akshay Kumar, Amy Jackson, Sudhanshu Pandey
Rating: 3.5/5 stars
ADCC AFC Women’s Champions League Group A fixtures
October 3: v Wuhan Jiangda Women’s FC
October 6: v Hyundai Steel Red Angels Women’s FC
October 9: v Sabah FA
Herc's Adventures
Developer: Big Ape Productions
Publisher: LucasArts
Console: PlayStation 1 & 5, Sega Saturn
Rating: 4/5
UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
KILLING OF QASSEM SULEIMANI
WOMAN AND CHILD
Director: Saeed Roustaee
Starring: Parinaz Izadyar, Payman Maadi
Rating: 4/5
Six large-scale objects on show
- Concrete wall and windows from the now demolished Robin Hood Gardens housing estate in Poplar
- The 17th Century Agra Colonnade, from the bathhouse of the fort of Agra in India
- A stagecloth for The Ballet Russes that is 10m high – the largest Picasso in the world
- Frank Lloyd Wright’s 1930s Kaufmann Office
- A full-scale Frankfurt Kitchen designed by Margarete Schütte-Lihotzky, which transformed kitchen design in the 20th century
- Torrijos Palace dome
More on Quran memorisation:
The years Ramadan fell in May
THREE
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COMPANY%20PROFILE
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Day 1, Abu Dhabi Test: At a glance
Moment of the day Dimuth Karunaratne had batted with plenty of pluck, and no little skill, in getting to within seven runs of a first-day century. Then, while he ran what he thought was a comfortable single to mid-on, his batting partner Dinesh Chandimal opted to stay at home. The opener was run out by the length of the pitch.
Stat of the day – 1 One six was hit on Day 1. The boundary was only breached 18 times in total over the course of the 90 overs. When it did arrive, the lone six was a thing of beauty, as Niroshan Dickwella effortlessly clipped Mohammed Amir over the square-leg boundary.
The verdict Three wickets down at lunch, on a featherbed wicket having won the toss, and Sri Lanka’s fragile confidence must have been waning. Then Karunaratne and Chandimal's alliance of precisely 100 gave them a foothold in the match. Dickwella’s free-spirited strokeplay meant the Sri Lankans were handily placed at 227-4 at the close.
UAE currency: the story behind the money in your pockets
THE BIO
Ms Davison came to Dubai from Kerala after her marriage in 1996 when she was 21-years-old
Since 2001, Ms Davison has worked at many affordable schools such as Our Own English High School in Sharjah, and The Apple International School and Amled School in Dubai
Favourite Book: The Alchemist
Favourite quote: Failing to prepare is preparing to fail
Favourite place to Travel to: Vienna
Favourite cuisine: Italian food
Favourite Movie : Scent of a Woman
Three ways to limit your social media use
Clinical psychologist, Dr Saliha Afridi at The Lighthouse Arabia suggests three easy things you can do every day to cut back on the time you spend online.
1. Put the social media app in a folder on the second or third screen of your phone so it has to remain a conscious decision to open, rather than something your fingers gravitate towards without consideration.
2. Schedule a time to use social media instead of consistently throughout the day. I recommend setting aside certain times of the day or week when you upload pictures or share information.
3. Take a mental snapshot rather than a photo on your phone. Instead of sharing it with your social world, try to absorb the moment, connect with your feeling, experience the moment with all five of your senses. You will have a memory of that moment more vividly and for far longer than if you take a picture of it.
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