Closing summary
Time for a recap.
The governor of the Bank of England has said there are signs inflation was now beginning to come down from its 41-year high, shortly after raising UK interest rates to their highest level in 14 years.
Andrew Bailey said this week’s inflation data, which showed prices rose at a slower annual rate of 10.7% last month, was a ‘glimmer’ that inflation was coming down, and lower than the BoE had expected.
Bailey said the Bank expects inflation to start falling more rapidly from late next spring, but insisted that it had to raise rates today to offset pressures from a tight labour market.
He told broadcasters:
We expect inflation to start falling more rapidly, probably from the late spring onwards.
But there is a risk that it won’t happen in that way, particularly because the labour market and the labour supply in this country is so tight
And that’s why, really, we had to raise interest rates today, because we see that risk as really quite pronounced.
NEW
— Faisal Islam (@faisalislam) December 15, 2022
In broadcast interview on inflation, Bailey:
“we have possibly seen this week the first glimmer that figures.. not only beginning to come down, but it was a little bit below where we thought it would be, and that’s very good news, but there’s a long way to go” pic.twitter.com/cqTNnA6Icf
Bailey was speaking after the Bank of England voted to raise UK interest rates for the ninth time in a row, to 3.5% from 3%.
But the decision was not unanimous, with two policymakers voting for no change and one arguing for a larger, 75 basis point, hike to 3.75%.
A majority of the Bank’s Monetary Policy Committee expect to keep raising interest rates at future meetings. The Bank also pointed out that the UK housing market appears to be weakening.
Economists predicted that UK interest rates could peak at 4.5% next year.
Today’s rate hike was criticised by the Unite union, while the Institute of Directors warned that the Bank risked prolonging the pain of the recession by tightening policy too much.
Here’s our news story on the Bank’s move:
The jump in borrowing costs means UK borrowers are facing a serious reality check, our economics editor Larry Elliott explains:
Here’s an explanation of what today’s rate hike will mean for mortgage-payes, other borrowers, and savers:
Here are today’s main other business stories, first on the UK’s industrial action:
Plus, the cost of living crisis:
And also:
High street shopper numbers plunge amid rail strikes and cold weather
High streets across the UK saw shopper numbers slump sharply early this week due to rail strikes and cold winter weather.
New figures from Springboard show UK retail destinations saw footfall decline by 8.6% from Monday to Wednesday compared to the same days last week.
The decline was particularly noticeable in high streets, where footfall dropped 15.1%.
On Tuesday and Wednesday, when thousands of rail workers took part in strike action in a long-running row over pay and conditions, high streets saw falls of 17.2% and 16.4% respectively.
Meanwhile, UK retail parks saw higher shopper numbers on these days as people opted to travel to out-of-town locations instead.
Central London was particularly dampened by a reduction of people travelling into the city, as footfall fell by 26.5% for the first three days of week, with 30.2% and 31.7% drops for Tuesday and Wednesday specifically.
🛍️ Meanwhile, footfall yesterday was down a THIRD in London due to the rail strike, at what should be the height of the Golden Quarter.
— Kien Tan (@kientan74) December 15, 2022
If this continues, it'll be catastrophic for hospitality and high street retail. (source: @Springboard_ via @RetailWeek https://t.co/mcPXHm7GnC) pic.twitter.com/05kWLqQtvc
