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Bank of England is set to hold interest rates at a 15-year high despite worries about the economy

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9 months ago

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LONDON (AP) — The Bank of England is set to join its peers in the U.S. and Europe in keeping borrowing rates unchanged at its policy meeting Thursday despite mounting worries over the state of the British economy.

The central bank is expected to keep its main interest rate at a 15-year high of 5.25%, where it has stood since August. Holding that high rate follows two years of hikes that targeted a surge in inflation, first stoked by supply chain issues during the coronavirus pandemic and then Russia’s invasion of Ukraine, which pushed up food and energy costs.

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Its decision comes during a busy pre-Christmas bout of central bank activity, with the U.S. Federal Reserve and the European Central Bank also set to keep their main borrowing rates on hold at multiyear highs.

The Bank of England is widely thought to be further away from cutting rates than the Fed or the ECB, with inflation in the U.K. higher than in the U.S. or across the 20 European Union countries that use the euro currency.

The Bank of England has managed to get inflation down from a four-decade high of over 11% — but there’s still a way to go for it to get back to its 2% target. Inflation, as measured by the consumer price index, stood at 4.6% in the year to October, still too high for comfort.

While the interest rate increases have helped in the battle against inflation, the squeeze on consumer spending, primarily through higher mortgage rates, has weighed on British economic growth.

Figures on Wednesday showing that the British economy contracted by 0.3% in October from a month earlier have fueled concerns about the near-term outlook on growth, especially as many households have yet to feel the impact of higher mortgage rates.

“The poor performance on the U.K. economy in October will inevitably reignite speculation about whether the country is back in recession,” said James Smith, research director at the Resolution Foundation. “But what’s not beyond doubt is that Britain is a stagnation nation — the 0.5% growth over the past 18 months is the weakest outside of a recession on record.”

High interest rates and low economic growth are hardly the ideal backdrop for the governing Conservative Party in next year’s general election, which opinion polls suggest it will lose to the main opposition Labour Party.

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Economy

S&P/TSX composite gains almost 100 points, U.S. stock markets also higher

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2 days ago

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September 13, 2024

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TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.

The S&P/TSX composite index closed up 93.51 points at 23,568.65.

In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.

The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.

The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.

The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.

This report by The Canadian Press was first published Sept. 13, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Economy

Statistics Canada reports wholesale sales higher in July

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3 days ago

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September 13, 2024

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OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.

The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.

The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.

The personal and household goods subsector fell 2.5 per cent to $12.1 billion.

In volume terms, overall wholesale sales rose 0.5 per cent in July.

Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.

This report by The Canadian Press was first published Sept. 13, 2024.

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Economy

S&P/TSX composite up more than 150 points, U.S. stock markets mixed

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4 days ago

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September 12, 2024

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TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 172.18 points at 23,383.35.

In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.

The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.

The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.

The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.

This report by The Canadian Press was first published Sept. 12, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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