Bank of England and Bank of Canada Hold Interest Rates Amid Inflation Concerns and Economic Slowdown Predictions

BoE and BoC to maintain interest rates at 5.25% and 5.00% respectively, amid consistent inflation rates and risk of economic contraction, with the first potential cut not expected until Q2 2024 at the earliest.

• The Bank of England (BoE) and the Bank of Canada (BoC) have indicated that they are likely done with policy tightening and will maintain their interest rates at 5.25% and 5.00% respectively, in response to ongoing inflation concerns and predictions of economic slowdown.
• The BoE is not expected to alter its rate until at least July 2024, in spite of consistently high inflation rates of about 6.7% as of September 2023, significantly diverging from the BoE's 2% target.
• The Bank of Canada is expected to hold its interest rates at 5.00% for a minimum of six months, with a potential cut anticipated in the second quarter of 2024 as the national economy slows
• Economists predict that the inflation will only gradually decline across the forecast horizon and it won't reach the 2% target until the second quarter of 2025, suggesting a prolonged period of inflation ranging above the mandate.
• Despite consistent rate hikes by both banks, economies are projected to grow slowly. The British economy is expected to expand by only 0.4% across 2024, while a third of economists predict Canada might face an official recession, defined by two consecutive quarters of contracting economic output.

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