Bank of England set to cut interest rates amid UK economic slump.
The Bank of England is expected to lower interest rates by another quarter point this week amid concerns over the UK’s economic performance. Revised data revealed the economy registered zero growth between July and September, with declines in both services and production sectors.
The UK economy’s quarterly GDP growth rate remained at 0% in Q3, down from 0.4% in Q2 and below the expected 0.1%. This stagnation was mainly attributed to a slowdown in the services sector, particularly in insurance and finance. The production sector also shrank by 0.4%, driven by a decrease in energy supply.
Concerns of a potential recession have grown, exacerbated by new changes implemented by the UK Labour government after its July election.
Meanwhile, the European Central Bank (ECB) reduced its key interest rate by 0.25 percentage points to 2.75% on Thursday, marking the fourth consecutive rate cut. This decision follows a trend of lowering rates amid persistent inflation in the services sector. The ECB’s President Christine Lagarde assured that the inflation rate is expected to return to the 2% target this year.
“The disinflation process is well on track,” the ECB stated, despite ongoing inflation in certain areas, such as wages. The bank remains committed to ensuring inflation stabilizes at its target level.
Markets anticipate further rate cuts in 2025, with ECB staff set to review their long-term growth estimate on February 7.
Will interest rates go down in 2025 UK predictions? Rates are predicted to fall by 0.25% on Thursday 6th February to help stimulate the UK economy.