The chancellor will have to live without a late boost from the Bankpublished at 12:08 Greenwich Mean Time 20 March
Dharshini David
Chief economics correspondent
Growth will take centre stage at Rachel Reeves Spring
Statement next week – but she’ll have to do without a late boost from one of
the leading players, the Bank of England.
The Bank’s decision to leave rates unchanged reflects
the bind it find itself in, torn between lingering persistent price pressures
and barely visible growth, and operating against a hugely uncertain global
backdrop – a factor mentioned front and centre in its report.
It thinks inflation could hit 3.75% by the autumn, before
easing. However, it acknowledges there are risks, not least as companies grapple
with higher labour costs due to higher National Insurance contributions and an
increase in the National Living Wage .
Those government policies have also been weighing on
business and consumer confidence – and surveys suggest hiring may be in the
firing line. The Bank’s also mindful that while the rate rises enacted
since 2021 have helped reduce inflation, they continue to hurt pockets.
Over a quarter of mortgage holders, it thinks, are yet to be exposed to higher
borrowing costs.
Meanwhile, like the rest of us, the Bank waits to see how
the twists in the Trump tariff tale develop. Already its counterpart in the US has cut its forecast for growth there.
As it stands, the Bank is expected to resume rate cuts next
month. In the meantime, it is borrowers that are paying the price of the uncertainty lingering at home and abroad.
