The Bank of England left interest rates unchanged at 5.25 per cent, bringing to an end a cycle of 14 straight increases in the cost of borrowing.
The Monetary Policy Committee had been widely expected to raise rates for the 15th successive time but market sentiment shifted when data showed a surprise fall in the rate of inflation on Wednesday.
In the event the MPC voted five to four in favour of putting interest rates on hold. Four members of the MPC voted to raise rates to 5.5 per cent.
It is the first time the Bank of England has taken a break from increasing rates since November 2021.
The Consumer Price Index fell to 6.7 per cent in August, following a reading of 6.8 per cent in July, and is now at its lowest point since February last year.
"Inflation has fallen a lot in recent months and we think it will continue to do so. That's welcome news," Bank of England governor Andrew Bailey said. "But there is no room for complacency. We need to be sure inflation returns to normal and we will continue to take the decisions necessary to do just that."
In a letter to the UK government he listed some of the factors that guided the policymakers decision. Food price inflation appears to have peaked, core consumer goods increases started to fall back and external cost pressures have eased.
There are however dangers to consider as well. According to Mr Bailey services inflation is projected to remain elevated, weekly earnings growth is running at an above inflation 8.1 per cent and oil prices are on an upwards trajectory.
He said that monetary policy will need to be sufficiently restrictive to hit the 2 per cent headline inflation target while noting the potential threat from "second-round effects of external cost shocks on inflation in wages and domestic prices".
"Borrowers and mortgage holders will breathe a sigh of relief, but the Bank of England still has some difficult decisions ahead," Russ Mould, investment director at AJ Bell, told The National.
"The economy isn’t really growing and purchasing managers' indices may warn of a slowdown ahead, while increases in the oil price, rising rents and a fresh slide in sterling (which increases the cost of imports) could all fuel inflation if they are sustained."
Split decision
The Bank of England now predicts that the UK economy will grow by only 0.1 per cent in the third quarter of this year, compared with a forecast of 0.4 per cent growth at its last meeting.
It also expects inflation to return to its target of 2 per cent by the second quarter of 2025.
“The split decision from the Monetary Policy Committee – with five in favour of a rate pause and four favouring a quarter-point hike – proves how tricky the decision was for the Bank of England, following the better-than-expected inflation data on Wednesday," said Alice Haine, personal finance analyst at Bestinvest.
The MPC's decision comes a day after the US Federal Reserve held interest rates steady, but noted that another rise is likely this year and that there would be fewer cuts than previously expected in 2024.
Sweden's Riksbank and Norway's Norges Bank each raised their key interest rates by 0.25 percentage points on Thursday, but the Swiss National Bank unexpectedly left its rate unchanged.
"In many ways, the Bank of England has delivered the same story as the Federal Reserve yesterday, and puts both central banks at odds with what is happening in Europe, where the European Central Bank and a number of European central banks have continued to raise interest rates further this month," Stuart Cole, chief macro economist at Equiti Capital told The National.
UK inflation peaked at 11.1 per cent in October last year, and the government has repeatedly pledged to reduce it to about 5 per cent by the end of the year.
Prime Minister Rishi Sunak said that the plan to bring inflation down was working.
"In the meantime we have got support in place to help families that are struggling, whether it is those on welfare or those with mortgages," he said.
"The most important thing I can do to help people is to bring inflation down as quickly as possible. Yesterday's figures show that the plan is working."
For Janet Mui, wealth manager at RBC Brewin Dolphin, pausing the upwards march of interest rates shows that the Bank of England is a little concerned that the effect of the 14 previous increases is now starting to bite into the economy, "particularly as an increasing number of households refinance into significantly higher rates".
"The other factor is that the latest data from the UK jobs market has weakened and the trend is expected to continue into 2024," she added.
Meanwhile, the pound fell about 0.9 per cent against the dollar to $1.2239 in the wake of the decision, its lowest level in six months.
The markets were evenly split on the chances of an interest rate rise this month, and are now 80 per cent convinced that there is one more increase left in this cycle.
"The Bank of England thinks they have done enough," said Mark Nash, head of fixed income alternatives at Jupiter Asset Management. "But they are taking a risk with inflation as the pound is falling."
Indoor cricket World Cup:
Insportz, Dubai, September 16-23
UAE fixtures:
Men
Saturday, September 16 – 1.45pm, v New Zealand
Sunday, September 17 – 10.30am, v Australia; 3.45pm, v South Africa
Monday, September 18 – 2pm, v England; 7.15pm, v India
Tuesday, September 19 – 12.15pm, v Singapore; 5.30pm, v Sri Lanka
Thursday, September 21 – 2pm v Malaysia
Friday, September 22 – 3.30pm, semi-final
Saturday, September 23 – 3pm, grand final
Women
Saturday, September 16 – 5.15pm, v Australia
Sunday, September 17 – 2pm, v South Africa; 7.15pm, v New Zealand
Monday, September 18 – 5.30pm, v England
Tuesday, September 19 – 10.30am, v New Zealand; 3.45pm, v South Africa
Thursday, September 21 – 12.15pm, v Australia
Friday, September 22 – 1.30pm, semi-final
Saturday, September 23 – 1pm, grand final
The specs
Engine: 5.0-litre supercharged V8
Transmission: Eight-speed auto
Power: 575bhp
Torque: 700Nm
Price: Dh554,000
On sale: now
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More from Neighbourhood Watch:
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Killing of Qassem Suleimani
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%3Cp%3E%3Cstrong%3EDirector%20%3A%3C%2Fstrong%3E%20Steffi%20Niederzoll%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%3C%2Fstrong%3E%20Reyhaneh%20Jabbari%2C%20Shole%20Pakravan%2C%20Zar%20Amir%20Ebrahimi%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
How to wear a kandura
Dos
- Wear the right fabric for the right season and occasion
- Always ask for the dress code if you don’t know
- Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
- Wear 100 per cent cotton under the kandura as most fabrics are polyester
Don’ts
- Wear hamdania for work, always wear a ghutra and agal
- Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
Tentative schedule of 2017/18 Ashes series
1st Test November 23-27, The Gabba, Brisbane
2nd Test December 2-6, Adelaide Oval, Adelaide
3rd Test Dcember 14-18, Waca, Perth
4th Test December 26-30, Melbourne Cricket Ground, Melbourne
5th Test January 4-8, Sydney Cricket Ground, Sydney
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
The schedule
December 5 - 23: Shooting competition, Al Dhafra Shooting Club
December 9 - 24: Handicrafts competition, from 4pm until 10pm, Heritage Souq
December 11 - 20: Dates competition, from 4pm
December 12 - 20: Sour milk competition
December 13: Falcon beauty competition
December 14 and 20: Saluki races
December 15: Arabian horse races, from 4pm
December 16 - 19: Falconry competition
December 18: Camel milk competition, from 7.30 - 9.30 am
December 20 and 21: Sheep beauty competition, from 10am
December 22: The best herd of 30 camels
Islamophobia definition
A widely accepted definition was made by the All Party Parliamentary Group on British Muslims in 2019: “Islamophobia is rooted in racism and is a type of racism that targets expressions of Muslimness or perceived Muslimness.” It further defines it as “inciting hatred or violence against Muslims”.
Tips for taking the metro
- set out well ahead of time
- make sure you have at least Dh15 on you Nol card, as there could be big queues for top-up machines
- enter the right cabin. The train may be too busy to move between carriages once you're on
- don't carry too much luggage and tuck it under a seat to make room for fellow passengers
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
A list of the animal rescue organisations in the UAE
