PNN – The Bank of England was forced to keep interest rates unchanged as inflation in the country rose and new US trade policies, especially tariffs, made Europe’s economic outlook even more uncertain.
According to the report of Pakistan News Network, the Bank of England’s Monetary Policy Committee decided to maintain the interbank interest rate at 4.5 percent. Although this decision was expected, it has intensified speculation about the central bank’s inability to provide a solution to exit the recession and has provoked mixed reactions in economic circles and financial markets.
Sharon Graham, general secretary of the Unite trade union, called this decision a factor in the worsening economic situation, saying: This inaction, at a time when the British economy is struggling, will not help people and will only lead to increased pressures on households.
Meanwhile, Professor Ashwin Kumar, Director of Research at the Institute of Public Policy Studies (IPPR), highlighted the continuing state of “economic uncertainty”: The government must urgently clarify its plans for investment in infrastructure and the transportation sector, as these measures are essential to stimulate economic growth.
Crisis in the mortgage market
One sector that has been hit hard by the central bank’s decision is the mortgage market, with Jenny Ross, editor of Moneyweek, describing the decision as “disappointing” for potential buyers and those looking to renew their mortgages. He daid: Homeowners whose fixed-rate mortgages are coming to an end will likely face a significant increase in monthly payments.
Rising interest rates have put significant pressure on British households in recent years. According to the UK’s National Institute for Economic and Social Research (NIESR), higher mortgage repayments could wipe out the savings of around 1.2 million British households, pushing the total number of bankruptcies to 7.8 million, or 28% of all households in the country.
These rising costs have forced some households to sell their homes. Although there are no exact figures on the number of people who have been forced to sell their homes due to rising mortgage interest rates, rising mortgage interest rates have put a lot of financial pressure on households, leading some to sell their homes.
Continuing high interest rates have now pushed the cost of housing for British households to unprecedented levels. Borrowers who were better off in previous years now have to deal with much heavier repayments, which could also reduce consumer demand in the economy.
Economic analysts believe that the central bank’s decision reflects ongoing concerns about inflation. While the UK’s economic growth is in a state of stagnation, policymakers are still concerned about rising inflation. Negative economic growth in recent months and a decline in job opportunities are among the factors that have increased the pressure on economic policymakers.
David Ramsden, the deputy governor of the Bank of England, recently warned that limited economic growth and chronic inflation have left the country in a difficult position where it can neither cut nor raise interest rates.
Global politics and its impact on the British economy
One of the important variables in the central bank’s decision-making is the global economic situation and international political developments. The return of Donald Trump to the White House, along with his tough trade policies and increasing import tariffs, has caused economists to worry about the future of global trade. The imposition of new tariffs will not only strain Europe’s supply chain, but could also lead to higher production costs and thus higher inflation. This uncertainty has prompted the Bank of England to adopt a cautious approach.
This combined with financial market volatility and an energy crisis caused by geopolitical conflicts, has led the Bank of England to take a conservative decision and keep interest rates at their current level. But the big question is how long will this policy continue?
Analysts believe that if economic growth remains weak and inflationary pressures ease, the central bank may consider cutting interest rates in the second half of 2025. But if inflation remains above the 2 percent target, policymakers may move to keep rates high for a longer period.
As British households face rising living costs, some experts believe the government should introduce new stimulus packages to boost economic growth alongside the central bank’s monetary policy. However, the government has yet to announce a specific plan.
Overall, the UK economy is in one of its most delicate periods, and its future is more than ever tied to macro-level decisions in the area of monetary and fiscal policy. As this situation continues, businesses and households will continue to await decisions that might restore stability to the economy, but so far there is no sign of this uncertainty being resolved.