Bank of England Cuts Rates and Growth Outlook, Sees Inflation ‘Bump’
by David Milliken and Andy Bruce
Reuters.com
LONDON, Feb 6 (Reuters) – The Bank of England cut interest rates by a quarter-point and some policymakers wanted a bigger move to offset a slowdown, but the BoE said it would be careful about further moves in the face of an expected inflation spike and global economic uncertainty.
The BoE halved its 2025 growth outlook – a blow for finance minister Rachel Reeves who is pushing to speed up the economy – and said inflation would be almost double its 2% target this year. Governor Andrew Bailey said he thought that would prove to be a “bump in the road” before inflation falls back.
Thursday’s rate cut to 4.5% from 4.75% was in line with expectations in a Reuters poll of economists.
But investors were surprised that Catherine Mann – previously the Monetary Policy Committee member most opposed to rate cuts – joined Swati Dhingra to seek a bigger reduction to 4.25%.
Interest Rate Moves, Plus the World is Waking Up to Gold & Silver
from King World News
Here is a look at interest moves by central banks today, plus the world is waking up to gold and silver.
The Gamble To Keep Interest Rates Low
February 6 (King World News) – Peter Boockvar: There is one thing to harass and jawbone Jay Powell to lower short term rates and another completely different thing trying to tame the long end of the yield curve which of course can only be influenced indirectly (outside of the Fed itself directly getting involved via asset purchases). Treasury Secretary Scott Bessent said on Fox Business yesterday that he and Trump are “focused on the 10 year Treasury. He is not calling for the Fed to lower rates.”
Economists Brace for Trump’s New Trade War to Rekindle Inflation Worldwide
by Jana Randow, Katia Dmitrieva and Enda Curran
The Japan Times
The more U.S. President Donald Trump threatens tariffs on U.S. trading partners, the more the worry of another inflation wave troubles global economists.
Stubborn growth in consumer prices was bothering much of the world even before Trump entered the White House. With this week’s measures against China offering the first concrete evidence that he isn’t just jawboning, prospects for at least some escalation and countermeasures elsewhere are forcing analysts to question how far global disinflation can hold.
“Tariff wars are inflationary, that’s not up for debate,” said Carsten Brzeski, ING’s global head of macro research. “In many places, they add to lingering effects from the past inflation shock, as well as big structural challenges” like aging societies and climate change, he said. “There are currently only very few reasons to expect inflation to remain permanently low.”
Will Salary Increases Outpace Inflation in 2025?
by John M. Bremen
Forbes
After several years of aggressive salary growth combined with talent shortages, effective leaders around the world are now recalibrating their approaches in response to a shifting economic landscape.
What is happening with salary increases and talent shortages?
The December 2024 edition of WTW’s Global Salary Budget Planning Report suggests that salary increase budgets are stabilizing, with 2025 planned increases projected to be on average 3.7%, compared with 3.8% in 2024. Salary increases remain at a relatively high rate by historic standards (the pre-pandemic norm was 3%) amid higher total labor expenses (which include salaries, bonuses, variable pay and benefits costs). Overall, fewer organizations (36%) reported difficulty in attracting and retaining employees, down nine percentage points from last year and 17 percentage points from the year prior.
Disney+ Streaming Service Sheds 1 Million Subscribers Following Price Hike
by Simon Kent
Breitbart.com
Disney’s traditional television business continues to decline with operating income at so-called linear networks dropping sharply by 11 percent to $1.1 billion in the last financial quarter.
Subscribers for the company’s flagship streaming video service, Disney+, slipped one percent from the prior quarter to 124.6 million, Reuters reports.
The company had warned of a drop in subscribers because of a price increase that took effect in October. It also forecast a modest decline in Disney+ subscribers in the second quarter, compared to the first.
Advertisers are also hesitant to engage with Disney+.
As Breitbart News reported, the streaming service is reportedly facing an exodus of advertisers from its ad-supported tier after subscriptions failed to meet expectations last year and several high-profile Star Wars and other Lucasfilm series flopped with viewers.
Russians Are Buying Huge Amounts of Gold with the Ruble Under Pressure from High Inflation and Sanctions
The World Gold Council said Russians bought 75.6 metric tons of gold last year, up by 6% from 2023.
by Matthew Fox
Business Insider
Russian consumers are buying record amounts of gold, according to data from the World Gold Council.
The organization said in a report published on Wednesday that Russian consumers purchased 75.6 metric tons of the precious metal last year, representing a 6% jump from 2023 and a 62% increase from 2021, right before the war in Ukraine broke out.
Russians have been piling up gold — which investors often view as a safe-haven asset— as surging inflation and strict sanctions eat into the value of the ruble domestically and internationally.
Russia’s statistics agency has said the country’s inflation rate in 2024 was 9.5%, the highest level since the war broke out in February 2022, and recent data indicates prices have continued to rise in the first few weeks of 2025.
No Signs of Inflation Slowdown Yet, Russian Central Bank Says
from The Moscow Times
The Russian Central Bank’s decision to raise interest rates to their highest level in two decades has so far failed to slow rising inflation, the regulator acknowledged in a bulletin published Wednesday.
The Central Bank raised its key rate to a record-high 21% in October 2024 as inflation, sanctions pressure and record defense spending for the war in Ukraine put the economy at risk of overheating.
“There are still no signs of a transition to a sustainable slowdown in price growth,” the Bank wrote in its report, titled “What the Trends Are Saying: Macroeconomics and Markets.”
What Decades of Easy Money Mean for Japan’s Fiscal Future
The Bank of Japan has absorbed half that country’s national debt, creating huge liabilities and leaving the nation at a monetary fork in the road.
by Peter C. Earle
The Daily Economy
Over the past three decades, Japan’s monetary policy has been characterized by near-zero interest rates and significant quantitative easing (QE), aimed at countering persistent deflation and stimulating economic growth. The outcome of decades of accommodative policies has resulted in the Bank of Japan (BOJ) accumulating a balance sheet equivalent to 125 percent of Japan’s GDP — a ratio that surpasses any other major central bank. Japanese government bonds (JGBs) dominate the balance sheet, accounting for over three-quarters of the total; more than half of Japan’s outstanding government debt is held on the BOJ’s balance sheet.
That extraordinary accumulation has created an acute vulnerability. As interest rates rise, the value of JGBs could plummet due to heightened inflation and duration risks (bonds with longer maturities decline more sharply as rates rise). Moreover, the yen, a liability of the BOJ, is inherently tied to the proportion of “hard” assets on the bank’s balance sheet. A significant selloff in JGBs could erode the yen’s value, triggering broader financial instability. In consequence, the dual vulnerability of Japanese Government Bonds (JGBs) and the yen to a protracted selloff could have significant repercussions for global markets.
Inflation Worsened in December. What it Means for Fed Rate Cuts.
by Nicholas Jasinski
Barron’s
The Federal Reserve’s preferred inflation measure accelerated slightly in December, as price growth remains stubbornly above the central bank’s goal.
Fed policymakers are on hold with interest rates until the inflation picture improves.
The personal consumption expenditures, or PCE, price index rose 0.3% in December and was up 2.6% from a year earlier, according to data from the Bureau of Economic Analysis on Friday. That matched expectations and followed a 0.1% uptick in November and 0.2% in October.
A spike in energy prices helped to lift the headline PCE price index in December. The combined cost of gasoline, electricity, and other energy goods and services jumped 2.7% during the month—but was still down by 1.1% from a year earlier.
Stocks End Down as Fed Shifts Inflation View. Nvidia Slides On Talk of China Sales Curb.
by Medora Lee
USA Today
U.S. stocks closed lower after the Federal Reserve left interest rates unchanged and took a less confident view on inflation, and chip darling Nvidia renewed its slide on a report President Donald Trump’s considering restricting the company’s sales to China.
Nearly everyone expected the Fed to keep interest rates steady, but the Fed dropped in its statement reference to inflation making “progress” toward its 2% objective. It simply noted that inflation remained “somewhat elevated.”
Paul Ashworth, Capital Economics chief North America economist still forecasts a rate cut in March, but “that will require a big downward benchmark revision to payrolls and a muted inflation out-turn in January. If the Fed doesn’t resume cutting in the next few months, however, we suspect the window will have closed.”