Bank of England holds rates steady, but a summer cut could still be in the cards
Six out of nine of the BOE's monetary policy committee opted to hold rates with three opting for a cut.
The policymakers' decision to hold rates comes after the latest data out Wednesday showed the U.K.'s annual inflation rate reached 3.4% in May, meeting analyst expectations but lingering far above the bank's target of 2%.
Earlier this year, the Bank of England said that it expects inflation to rise to 3.7% in the third quarter, before starting to cool into next year. It nevertheless still doesn't know the outcome of U.S. President Donald Trump's global tariffs policy, and with conflict erupting in Middle East, inflationary pressures could rise.
Those pressures, coupled with lackluster U.K. growth after a 0.3% economic contraction in April, put the central bank in a difficult position on whether — and when — to cut rates.
"The bank last month divided 5 [MPC members] to 4 over the decision to cut rates a little, and the majority were very much seeing the economy slowing down and the threat of a faster slow down if tariffs and other U.S. policy seep through the economy, so that is the worry," John Gieve, former deputy governor of the Bank of England, told CNBC on Wednesday.
"The question was, 'Should we cut now or wait a little bit?' That was the way they were looking at it [then]," he added.
"The Middle East conflict complicates things further. Firstly, it could have an effect on oil prices which could push inflation up even further ... and, secondly, it could be disruptive to the world economy and to trade, which again would be a downward pressure on our growth, so that's precisely where the bank is right now," he told CNBC's "Squawk Box Europe."
Economists polled by Reuters widely expect BOE policymakers to cut rates by 25 basis points (bps) at the next gathering in August, and to make a trim of another 25 bps in the fourth quarter.
Grieve said the confluence of external, uncontrollable and potentially inflationary pressures — along with the domestic outlook for growth, taxation and spending — made it hard to predict the BOE's strategy.
"What the bank and markets are expecting is that interest rates will edge down to 4% or perhaps a little bit lower the rest of the year unless there's a really big development on the world stage, but we don't know how this conflict in the Middle East will play out, and we don't know how tariffs ... are going to play out. So [Bank of England policymakers] are going to have watch things month by month," Grieve said.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
23 minutes ago
- Yahoo
Are You Eligible for Trump's Auto Loan Deduction? Here's Who Qualifies
President Donald Trump's 'One Big Beautiful Bill,' which he signed on July 4, 2025, included some welcomed relief for eligible new car buyers, who are facing high purchase prices and interest rates. From 2025 to 2028, you may qualify to deduct as much as $10,000 annually in car loan interest on your federal tax return. Read Now: Find Out: A recent IRS fact sheet broke down the key vehicle, taxpayer and loan requirements for this new deduction. Whether you recently bought a vehicle or are looking for one, find out how to qualify and how much your potential tax savings could be. Does Your Vehicle Qualify? This deduction applies only if your new (not used) vehicle meets all of these rules: It was assembled at the final stage at a U.S. plant. Its gross weight is below 14,000 pounds. It has two or more wheels and is suitable for driving on public roads. It doesn't have a salvage title. It's an eligible vehicle type, such as a motorcycle, SUV, car, pickup truck or van. Eligible makes and models vary. As of April 2025, CarEdge listed 117 American-made vehicles from makers such as Chevrolet, Tesla, Nissan, Ford, Volkswagen, Hyundai, Mazda, Jeep, Honda, GMC, Toyota and Volvo. Since the final assembly location is what matters, even international brands can qualify. If you're shopping for a car, you can ask local dealerships, many of which are already advertising the deduction, or you can research U.S.-manufactured options online. The United Auto Workers website also noted that a U.S.-manufactured vehicle will have a vehicle identification number (VIN) that begins with the digit 1, 4 or 5. Discover Next: What Are the Taxpayer Rules? Similar to the student loan interest deduction, the new auto loan interest deduction is available whether you itemize or take the standard deduction, and you can't exceed the modified adjusted gross income (MAGI) limit for your filing status. To get the maximum auto loan interest deduction, your MAGI can't be above $200,000 if you're a joint filer or $100,000 if you use another filing status. According to the bill's text, there's still a partial deduction with a MAGI of up to $250,000 for joint filers and $150,000 for other filers; the reduction is $200 per $1,000 of your MAGI exceeding the base threshold. What Are the Financing Rules? Even if you meet the taxpayer and vehicle rules, you'll need to make sure your loan qualifies. Specifically, you must have taken out your loan after December 31, 2024, and it must be a personal vehicle loan where you used the vehicle as collateral. So, if your family gave you a loan to buy an eligible car or you got an unsecured personal loan from the bank, you can't deduct the interest. The same is true if you took out a loan to buy a vehicle for commercial use, leased the car or financed a vehicle you planned to use for parts. If you financed or leased a business vehicle, you might qualify for a different tax break via a business expense deduction. You can get the details in IRS Publication 463. How Big Could Your Deduction Be? If you're eligible for this deduction, your potential tax savings will depend on your tax bracket, the amount of auto loan interest you paid and your MAGI. Keep in mind that the deduction lowers your taxable income and isn't a credit that directly lowers your tax liability. For example, if you pay the maximum $10,000 in annual auto loan interest, have a MAGI low enough for the full deduction and fall in the 22% tax bracket, you could save $2,200 that year. But the most someone in the 10% tax bracket could save is $1,000. CBS News noted that you'll likely see smaller deductions after the first year due to how banks frontload interest. You may also qualify for extra savings of up to $7,500 if your new vehicle is eligible for the federal EV credit. While the 'One Big Beautiful Bill' cut this tax perk, it remains available for eligible vehicles bought through September 2025. How To Claim the Deduction The IRS has provided few details so far on reporting auto loan interest on your next tax return, but it noted that you will have to provide your vehicle's VIN. You can also expect your auto lender to send a tax document showing the interest paid. The IRS should provide more details closer to tax season. More From GOBankingRates 6 Big Shakeups Coming to Social Security in 2025 This article originally appeared on Are You Eligible for Trump's Auto Loan Deduction? Here's Who Qualifies Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Newsweek
26 minutes ago
- Newsweek
Real Reason Behind Birth Rate Decline
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Countries all over the world are facing declining birth rates, sparking fears there will one day be more elderly people than working-age people to support them. For example, in the United States, the fertility rate (the average number of children a woman has in her lifetime) is now projected to average 1.6 births per woman over the next three decades, according to the Congressional Budget Office's latest forecast released this year. That is below the replacement rate of 2.1 births per woman required to maintain a stable population without immigration. Financial struggles are often cited as the reason for people having fewer or no children, but recent research has focused on cultural changes. Newsweek has pulled together the main reasons birth rates are declining to build a detailed picture of the issue many governments are trying to tackle. The Real Reason Behind The Birth Rate Decline The Real Reason Behind The Birth Rate Decline Newsweek Illustration/Canva/Getty Financial Worries The 2008 financial crisis and its impact on housing, inflation and pay is generally cited a major contributor to people's decisions to delay having children, to have fewer children or not to have them at all. In June, the United Nations Population Fund (UNFPA) found that 39 percent of the 14,000 people across the 14 countries it surveyed said financial limitations prevented them from having their desired family size. "Young people overwhelmingly report worries and uncertainty about their futures. Many expect to experience worse outcomes than their parents did," the report said. "Their concerns about climate change, economic instability and rising global conflicts will be reflected in the choices they make about raising families." U.S. President Donald Trump's administration has taken steps to try to tackle the concerns, including the White House exploring giving women a "baby bonus" of $5,000, according to an April report in The New York Times. The country could also make childbirth free for privately insured families, with the bipartisan Supporting Healthy Moms and Babies Act, which would designate maternity care as an essential health benefit under the Affordable Care Act, which was introduced in the Senate in May. Family Policies Policies around child care and parental leave come up just as often as financial struggles—and the two are often connected. "Countries that have sustained or moderately increased birth rates—like France or the Nordic nations—have done so by investing in affordable child care, paid parental leave, gender-equal workplaces and housing support," said Poonam Muttreja, executive director of the Population Foundation of India. "These create an enabling environment where people feel secure in having children," she told Newsweek. "Fertility decisions are shaped by long-term confidence, not one-off cash handouts." Similarly, Theodore Cosco, a research fellow at The Oxford Institute of Population Ageing, told Newsweek that "addressing declining birth rates would require comprehensive support mechanisms, such as affordable child care, paid parental leave, health care access and economic stability." Gender Inequality Another linked aspect to this is gender inequality—a cause often stressed by Muttreja. While speaking about the situation in India, where the fertility rate is 1.9, according to World Bank data, she called gender inequality a "critical challenge." "No country has become economically advanced without a substantial participation from women in the economy," she previously told Newsweek. "The burden of caregiving, whether for children or elderly family members, falls disproportionately on women, and policies must enable women to balance work and caregiving effectively." Tomas Sobotka, deputy director of the Vienna Institute of Demography, told Newsweek: "Recent research emphasizes that fertility tends to be higher where gender equality is stronger, and where institutional support helps reduce the cost and complexity of raising children." He cited France and Sweden as examples. While their fertility rates have still plummeted in the past decade (1.66 and 1.45, respectively, according to World Bank data), they are higher than the European Union (1.38). This is "partly thanks to generous family policies with affordable child care, well-paid parental leaves and generous financial benefits to families," he said. "These, together with high levels of gender equality, make it easier especially for the better educated women and couples to achieve the number of children they planned." Cultural Shifts Another major, albeit more difficult to measure, contributor is a shift in cultural values. A new study conducted by academics affiliated with the National Bureau of Economic Research (NBER) published last month found that "short-term changes in income or prices cannot explain the widespread decline" in fertility but rather there has been a "broad reordering of adult priorities with parenthood occupying a diminished role." Authors Melissa Schettini Kearney, an economist from the University of Notre Dame in Indiana, and Phillip B. Levine, an economist from Wellesley College in Massachusetts, found there have been "changes in how much value people place on different life choices, generally reflecting a greater emphasis on personal fulfillment and career." These include the fact that most women in high-income countries now work, while it was previously "reasonable to consider having children as a widespread priority for women." But they do not attribute this to "whether women work at all after they are married or have had their first child" but rather "the tension between a lifetime career and the way motherhood interrupts or alters that lifetime career progression." Kearney and Levine also spoke about changes in preferences in general, citing several surveys they reviewed that showed that more people say having a career they enjoy and close friends is extremely or very important than those who say the same about having children. They also mentioned changes in parenting expectations, with it becoming "more resource- and time-intensive" than before, a reduction in marriages, access to effective contraception, abortion policies, fertility and infertility treatments. These reasons became clear when Newsweek looked at Norway, which is considered a global leader in parental leave and child care policies, with the United Nations International Children's Fund (UNICEF) ranking it among the top countries for family-friendly policies. Norway offers parents 12 months of shared paid leave for birth and an additional year each afterward. It also made kindergarten (similar to a U.S. day care) a statutory right for all children age 1 or older in 2008. Yet, Norway's fertility rate has dropped drastically from 1.98 in 2009 to 1.44 in 2024, according to official figures. The rate for 2023 (1.40) was the lowest recorded fertility rate in the country. Newsweek spoke with several local experts about Norway and all cited recent cultural changes, including lower rates of couple formation for those in their 20s, young adults being more likely to live alone and the demands of modern parenting. What Is The Solution? "The short answer is that there are no easy fixes," Kearney and Levine said in their report. "There is no single policy lever that will reliably boost fertility." Kearney and Levine's main call to action is to "widen our lens" when discussing fertility. "There is still so much more we need to know before we can provide something resembling a definitive answer," they said. "Policies like parental leave, child care subsidies, baby bonuses, etc., are much easier to implement and have the potential to affect fertility more rapidly, if they were effective," Levine told Newsweek. "Changing the social conditions that encourage family formation is more difficult and takes longer to accomplish.
CNBC
26 minutes ago
- CNBC
Restaurants are adding dozens of new spicy menu items in a bid for younger diners
Restaurant brands are hoping hot new menu items will drive visits among younger costumers. Hot, in this case, is literal. Spicy items like chicken sandwiches, seasoned sides and sauces are cropping up more often on menus at major fast-casual and quick-service chains. The idea is to introduce easy-to-execute and buzzy options that can capture the attentions of Gen Z and Gen Alpha diners, even if it's only a flash in the pan. One of those companies was Chipotle, which in June introduced Adobo Ranch, its first new dip in five years, as a limited-time offer. "From an operations perspective, the sauce is a lot easier to do than bringing in another LTO or another protein. And you get a lot of the same benefit," Chris Brandt, Chipotle's president and chief brand officer, told CNBC. The draw toward spice is yet another way restaurants are responding to slower consumer spending while trying to keep costs in check. A KPMG Consumer Pulse survey found that U.S. consumers plan to spend 7% less per month at restaurants this summer. "There's been a pullback, especially from lower-income consumers," said Gregory Francfort, lead restaurant analyst at Guggenheim Securities. "Spice is a low-cost, high-return way to re-engage them." "Restaurants are really trying to be aggressive with their marketing calendars and releasing new products now," Francfort said. From March to June, U.S. restaurant chains collectively launched 76 new spicy menu items, representing roughly 5% of new menu items, according to market research firm Datassential. That includes permanent additions and limited-time offers and is roughly in line with historical menu item additions in the category over the last several years. Around 95% of restaurants now offer at least one spicy item on their menu, according to Datassential. Though the concept of spice on menus isn't new, it appears to be catching fire with Generation Z and Generation Alpha — those roughly under the age of 30. Their preference for bold, spicy flavors is inspiring more restaurants to turn up the heat. Up to 50% of Gen Z consumers eat at least one spicy meal a week, according to data from soda brand Sprite, which has been playing up its tangy flavor profile. "Younger generations (Gen Z, for example) are fueling the spicy trend, craving bolder, more adventurous flavors," a Wendy's spokesperson said in a statement to CNBC. "They're not looking for bland or predictable," said Cava's chief concept officer and co-founder, Ted Xenohristos. "They want strong flavors." In April, Cava launched Hot Harissa Pita Chips to meet the rising demand. The chain also offers the Harissa Avocado bowl, harissa vinaigrette, and harissa honey chicken. In May, Taco Bell launched the Mike's Hot Honey Diablo Sauce, a collaboration between Mike's Hot Honey and the taco chain's signature Diablo sauce. It followed a February launch of the Caliente Cantina Chicken Menu, building off the fan-favorite cantina chicken. In June, Wendy's released the Takis Fuego Meal, a collaboration with the spicy rolled tortilla chip snack, which includes the chain's signature spicy chicken sandwich and Takis-flavored fries. There's one challenge in introducing spicy items: Gen Z and Gen Alpha tend to move on from trends quickly. That makes it harder for restaurants to rely on one popular item for long. Recent flash points like sweet and spicy and Nashville Hot are already seeing a drop in interest among Gen Z, according to Datassential. Instead, new flavor profiles with global ties are seeing stronger engagement among younger consumers, the firm found. Spicy menu items have gained traction primarily through social media. Platforms like TikTok and Instagram have become key discovery tools for Gen Z and Gen Alpha. Restaurants are using these platforms to promote limited-time offers and influencer content, including taste tests and reaction videos. Short-form content can create urgency and encourage trial. "Spicy food consistently performs well," Tommy Winkler, a TikTok food influencer, told CNBC. "It is essentially the new billboard. It is a good chance that someone will end up ordering it." In June, the word "spicy" was mentioned over 40,000 times online, according to Datassential. The data showed spikes in those mentions around the time new spicy items started to trend. This month, Coca-Cola-owned Sprite launched a campaign called "Hurts Real Good" to tap into the spicy food movement. The brand is positioning the soda as a pairing for spicy foods and is partnering with McDonald's, Takis and Buldak Fried Noodles. The campaign includes a TikTok filter and other social media activations. Oana Vlad, global vice president for Sprite, highlighted other eye-catching events like mukbangs — live-streamed broadcasts of hosts eating large amounts of food — or spicy noodle challenges as helping to bring spicy food into online culture. "At Sprite, we always try to be inspired by consumer-first insights and then deliver something of value for a behavior that already exists," Vlad told CNBC. As of late April, the lemon-lime beverage ranked as the third most-popular carbonated soft drink by volume share, according to Beverage Digest. McDonald's fountain Sprite went viral a few years ago as social media users posted videos calling the taste "sharp" and filming their reactions to trying it. "A huge portion of Gen Z try their first Sprite at McDonald's," Vlad said. "You can see fans describing Sprite at McDonald's as a flash of lightning or electric." The diversity of younger generations is also helping to steer them toward flavors with depth, texture and regional identity. Chili Crisp, used in traditional Chinese cooking; Nam Phrik, originating in Thailand; and Piri Piri, commonly associated with Portuguese and African cuisines, are increasingly showing up on U.S. menus, according to Datassential. "As the population gets more diverse and as younger consumers want to experiment more, we see a greater willingness to try new flavor profiles," Sara Senatore, managing director and senior restaurants analyst at Bank of America, told CNBC.
