This comes from The Telegraph this morning:
The Bank of England will slash interest rates to their lowest level in more than three years as Britain battles an unemployment crisis, a Swiss lender has claimed.
Rates will fall from the present level of 3.75pc to 2.75pc after the summer, according to Lombard Odier. The figure would be the Bank Rate's lowest point since November 2022.
The suggestion is that this will be driven by "ructions in the employment market" because of a “collapse in job vacancies to below pre-pandemic levels and a rising unemployment rate”.
The jobs market has been worsening, with unemployment standing above 5pc in the three months to October, according to the Office for National Statistics (ONS).
They added:
Meanwhile, private sector pay growth slumped to 3.9pc in the three months to October, its weakest level since early 2021.
This is the data:
The suggestion does have evidence to back it. The result would be a bank base rate close to neutral. In other words, it would be running at around the rate of inflation, assuming that continues its current downward trend.
Is this possible? Not in the opinion of the Bank of England. They predict nothing less than. 3.5% next year, but they ignore the very real risk of a recession. So, yes, I think this is plausible, and much more so than anything the Bank of England suggests, especially if, as I suspect, AI fails to deliver for stock markets and does hike inflation, as I note is possible this morning.
2026 is not, in other words, going to be an easy ride as antisocial neoliberalism continues to hold us in its death throes.
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Who would have thought it….. The Telegraph with its finger on the pulse.
The Bank of England will get there…… but very reluctantly and far too late.
Agreed
Morning Richard. Wrong thread entirely, but thought you might like to see the latest study on UPFs and their effects. And the Government wonders why young people – particularly those in less well off families – are suffering high rates of depression.
“High ultra-processed food intake is associated with altered brain perfusion, depressive symptomatology, and increased inflammatory profile”
https://www.sciencedirect.com/science/article/abs/pii/S0165032725022876?dgcid=raven_sd_via_email
Thanks. Used this morning.
I still dream of one day having a really good clear out of the numpties who infest our central bank and the Treasury. I really do……………….
My regular contact is over 25 years ago, but my experience was that, at the junior/middle level, there was a lot of smart people with different ideas….. certainly not cardboard cutout neo-liberals. Sadly, it seems career progression to the top sifts out these folk.
The “bank underground” blog suggests that inquiring minds still reside in Threadneedle Street.
Neoliberalism and it’s damage is playing out like a Greek tragedy. The Bank of England is the antagonist, making things worse than they need to be, fearing non-existant risks of inflation. There are no supply shortages, especially of workers. Christmas spending by consumers appears to be down (anecdotally- no figures published yet) which could force discounting by supermarkets and other major retailers. This might push inflation down slightly by summer.