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Interest rates expected to be held by Bank of England

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Interest rates expected to be held by Bank of England


Kevin PeacheyCost of living correspondent

Getty Images External shot of the Bank of England building taken from a low view with pillars either side in the foreground.Getty Images

Interest rates are widely expected to be held at 4% when policymakers at the Bank of England meet on Thursday.

The Bank rate, which heavily influences borrowing costs and savings rates, was cut from 4.25% to 4% by the Bank’s Monetary Policy Committee (MPC) at its last meeting in August.

It took the rate down to its lowest level for more than two years, but many analysts believe there will be no further cuts during the rest of this year.

The decision will be revealed at 12:00 BST and comes after official data on Wednesday showed prices were rising at nearly twice the target level, driven by the higher cost of food.

The rate of inflation remained at 3.8% in August, well above the 2% target. The Bank rate is policymakers’ main tool for controlling inflation.

In theory, making borrowing more expensive means people have less money to spend, which slows prices rises. However, increasing borrowing costs can also harm the economy.

Closely-watched vote

The decision to cut the Bank rate in August was taken after an unprecedented second vote by the nine members of the MPC.

Andrew Bailey, governor of the Bank, said the decision to cut interest rates was “finely balanced”.

Analysts expect Thursday’s vote to be more clear cut, with no change expected.

The relatively high rate of inflation means policymakers are unlikely to risk pushing that higher by cutting the Bank rate.

However, they do expect the inflation rate to start to drop soon, which leaves the possibility open of further interest rate cuts.

A line chart showing interest rates in the UK from Jan 2021 to August 2025. At the start of January 2021, rates were at 0.1%. From late-2021, they gradually climbed to a high of 5.25% in August 2023, before being cut to 5% in August 2024, 4.75% in November, 4.5% in February 2025, 4.25% in May, and 4.0% on 7 August.

The Bank rate has a big impact on the interest homeowners face when taking out a new fixed-rate mortgage.

Lenders use the Bank rate to set their own rates. As a result, the expectation of interest rate rises can push up mortgage rates while the expectation of interest rate cuts can pull mortgage rates down.

Mortgage rates have dropped very slightly since the MPC’s last meeting in August, but further moves are uncertain, according to Rachel Springall, from the financial information service Moneyfacts.

“Many will be waiting with bated breath for the Budget. This waiting game, alongside forecasts for inflation to remain above target, makes it less likely for the Bank of England to make further rate cuts this year,” she said.

She said that savers had seen a downward trend in returns during the time when the Bank has been lowering the Bank rate.

“The average easy access [savings] rate has fallen further below 3%, so savers must act now and switch their variable rate account if it no longer pays a decent return on their hard-earned cash,” she said.

Global picture

The government would be keen to see interest rates fall further, to boost growth in the UK economy.

The Resolution Foundation think-tank, which which focuses on those on low to middle incomes, said living standards needed to improve after a “lost” 20 years of growth.

But ministers will be aware of the inflationary risk that remains in the UK, especially as prices are rising slower in countries such as the US, Germany, and France.

Thursday’s MPC decision will come after the US central bank chose to cut interest rates on Wednesday to a range of 4% to 4.25% for the first time since December.

Last Thursday, the European Central Bank chose to hold its interest its at 2%.



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Australia fuel crisis: Panic buying prompts PM to reassure nation over fuel supply

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Australia fuel crisis: Panic buying prompts PM to reassure nation over fuel supply



Anthony Albanese says nation’s supply remains “secure” amid reports of panic buying and shortages.



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Meta and YouTube found liable in social media addiction trial

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Meta and YouTube found liable in social media addiction trial



A woman has been awarded $6m in a verdict that could have implications for hundreds of other cases in the US.



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Target faces a new boycott over ICE response as retailer presses ahead with turnaround

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Target faces a new boycott over ICE response as retailer presses ahead with turnaround


A major teachers’ union is calling for its members to skip Target when buying back-to-school supplies, the latest twist in a series of boycotts that have targeted the big-box retailer as its turnaround shows signs of life, CNBC has learned.

The AFT, or American Federation of Teachers, passed a resolution Thursday that calls on its 1.8 million members and others to shop at local stores and not at Target, saying the company did not respond adequately to the surge of federal immigration enforcement in the retailer’s hometown of Minneapolis this winter. Federal agents shot and killed two U.S. citizens, Renee Good and Alex Pretti, during the operation.

The labor union, which is affiliated with the AFL-CIO, plans to urge a similar resolution at AFL-CIO’s convention in Minneapolis this summer and at conventions held by other organizations, including the NAACP and LULAC, AFT President Randi Weingarten said.

Target declined to comment specifically on the AFT’s resolution but said in a statement that it has “a longstanding commitment to strengthening the communities we serve,” including donating 5% of profits since the company’s founding and offering a discount to educators as part of a teacher appreciation program.

Target’s annual sales have declined for the past three years in a row, but the company’s new CEO Michael Fiddelke laid out an ambitious plan earlier this month to refresh its stores, add more enticing merchandise and return to sales growth. The retailer said it expects net sales to rise about 2% this fiscal year compared with the prior year and anticipates sales will grow every quarter.

It is unclear if and how much the AFT’s call for a back-to-school boycott could hurt Target, which is trying to win back customers. Earlier this month, Atlanta area pastor Jamal Harrison Bryant announced the end of a yearlong boycott of the company, called Target Fast, which had started because of the company’s rollback of major diversity, equity and inclusion initiatives.

At a press conference, Bryant said Target has demonstrated its commitment to the Black community with investments in Black businesses and donations to Historically Black Colleges and Universities. Yet other activists leading a separate boycott, including former Ohio state Sen. Nina Turner, have said they continue to call for shoppers to steer clear of Target.

The AFT previously supported and participated in the Target boycott over its DEI rollback.

The retailer has attributed some of its sales losses to backlash to its DEI decision, along with other factors including company missteps with merchandise, a weaker store experience and softer discretionary spending.

At an investor meeting in Minneapolis in early March, Fiddelke stressed that it’s “a new chapter for Target.” He said the company is “doing the work to build connection with new guests, deepen relationships with existing guests and earn back trust with guests we’ve disappointed.”

In a separate email to Target employees earlier this month, Fiddelke highlighted how the retailer is putting its strategy into action, including through its move to cut prices on more than 3,000 items and the opening of its 2,000th store. He said Target has made progress with winning back trust, too, noting the end of the Target Fast boycott.

He said Target has had “ongoing conversations with the organizers” of the boycott, who have “acknowledged the meaningful contributions Target has made, and will continue to make, to the Black community.”

In an interview with CNBC, Weingarten said the AFT’s boycott is focused on what she called Target’s lack of response to the surge of aggressive and violent immigration enforcement in its own backyard. Weingarten said the AFT sent a letter to Target and met with Target staff to encourage them to speak up before the union moved to pass the resolution.

“Target was negotiating with our colleagues in the civil rights community for weeks and weeks and weeks,” she said. “They could have very easily dealt with both [concerns about DEI and immigration enforcement] and they chose not to.”

She said Target is “more worried about standing with the Trump administration than the communities that made them a profitable company.”

Fiddelke joined dozens of executives from Minnesota-based corporations in co-signing a letter in late January calling for an “immediate de-escalation” in the state after the fatal shooting of Pretti. However, the letter did not name the shooting victims Pretti or Good or call out the president, his immigration policies or federal agents.

Fiddelke also shared a video message with employees that more directly acknowledged current events, but stopped short of calling for ICE agents to leave the city or for accountability in the two shooting deaths.

Weingarten described the CEOs’ letter as “insulting” and said it “basically blamed both sides.”

She said the union, which includes many teachers, can have the greatest financial impact during the back-to-school shopping season this summer and fall. By passing the resolution now, she said, the AFT can get the word out to members and “give Target enough time to come back to its senses.”



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