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What happened
The Bank of England is set to announce its monetary policy decision, with expectations to maintain the interest rate at 4% following a recent inflation rate of 3.8%. The focus is on the potential adjustment of the quantitative tightening (QT) program, which has faced criticism for raising borrowing costs due to the sale of government bonds. Economists predict a slowdown in the pace of gilt sales from £100 billion to around £72 billion, which could alleviate pressure on elevated gilt yields. This adjustment would assist Chancellor Rachel Reeves in managing the upcoming budget. The situation is compounded by the Federal Reserve's recent interest rate cut, indicating a broader trend in monetary policy adjustments.
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Key insights
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1
Interest Rate Stability
The Bank of England is expected to keep rates steady at 4%.
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2
Quantitative Tightening Concerns
QT has been criticized for increasing borrowing costs.
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3
Government Budget Implications
Slower gilt sales could ease pressure on the government's budget.
Takeaways
The Bank of England's decisions today will significantly impact the UK's economic landscape.