IMF supports Bank of England to “gradually” lower interest rates position – Mortgage Strategy
The IMF said the Bank of England should “continue to gradually ease monetary policy while maintaining flexibility in light of rising uncertainties.”
As part of its annual health check on the UK economy, the influential IQ, based in Washington, said BOE should remain flexible given the risks posed by global tariff uncertainty.
“Given the increased uncertainty, the flexibility to adjust the monetary position in either direction is retained,” it said.
Bank rates are currently at 4.25%, after cutting a quarter of the cut last year.
The next BOE Monetary Policy Committee meeting is scheduled to be held on August 7, with investors making two layoffs in the second half of the year.
However, inflation was driven by 3.4% in May and other energy costs in the year to June, which could delay lowering interest rates.
But the IMF argued in its fourth article consultation with the UK:: “The collection of title inflation rates expected to continue in the second half of 2024 due to rising prices, fundamental impacts of employers’ NIC rate hikes and energy prices.
“Nevertheless, the rise in inflation should be temporary and average consumer price inflation is expected to drop from 3.2% in 2025 to 2.3% next year.”
The corpse continues to praise the government’s “bold” training programs and regulatory reforms.
It forecasts UK growth rate of 1.2% this year and 1.4% in 2026, “as monetary easing, positive wealth impact and confidence increase, strengthening private consumption, and the growth in public spending in the October budget will also help support growth”.
But it warns that stricter financial situations than expected, coupled with household precautionary savings, “can hinder private consumption and slow recovery rebound.”
It added: “Over ongoing global trade uncertainty could also put the UK’s growth weight by weakening world economic activity, disrupting supply chains and undermining private investment.”
Prime Minister Rachel Reeves said: “Today’s IMF report confirms that the choices we have taken ensure that the UK’s economic recovery is underway and that our plans will address deep-rooted economic challenges facing global headwinds.
“Our fiscal rules allow us to address these challenges by investing in renewals in the UK. We will commit billions of pounds to improve transport connections, provide record funding for affordable homes and support major projects like Sizewell C to drive economic growth.”
But critics say Reeves must hike Taxintroduce charges to use NHS or discard Triple lock In the state pension, provide yourself with fiscal net out for unexpected expenses in the fall budget.
Conservative shadow minister Mel Stride said: “The IMF’s conclusion is clear – the Prime Minister has raised his credit card and her only option is to cut spending or raise taxes.
“The welfare collapse shows that the labor force is completely unable to dominate spending. Businesses and families must support higher tax burdens.”
