Bank of England Widely Expected to Hold Interest Rates

File photo: The risk of a resurgence in inflation and the July 4 election are seen as keeping the Bank of England from starting to cut rates at its Thursday meeting ( AFP)
File photo: The risk of a resurgence in inflation and the July 4 election are seen as keeping the Bank of England from starting to cut rates at its Thursday meeting ( AFP)
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Bank of England Widely Expected to Hold Interest Rates

File photo: The risk of a resurgence in inflation and the July 4 election are seen as keeping the Bank of England from starting to cut rates at its Thursday meeting ( AFP)
File photo: The risk of a resurgence in inflation and the July 4 election are seen as keeping the Bank of England from starting to cut rates at its Thursday meeting ( AFP)

The Bank of England is widely expected to keep interest rates unchanged on Thursday, a day after official figures showed inflation in the UK holding steady at an annual rate of 2.2% in August, with higher airfares offset by lower fuel costs and restaurant and hotel bills.
The latest reading from the Office of National Statistics on Wednesday was in line with market predictions and means that inflation remains just above the British central bank’s goal of 2% for the second month running, having fallen in June to the target for the first time in nearly three years.
Last month, the central bank reduced its main interest rate by a quarter-point to 5%, the first cut since the onset of the pandemic. It was a close call though with four of the nine members voting for no change.
The economic landscape indicates that the BOE is likely to delay a second rate cut until November.
Inflation, wage growth, and labor market conditions are the three key indicators the bank monitors when adjusting monetary policy.
On Wednesday, data showed that British inflation held steady in August but sped up in the services sector which is closely watched by the Bank of England, adding to bets that the central bank will keep interest rates on hold on Thursday.
Consumer price inflation of 2.2% last month was unchanged from July, the Office for National Statistics said, matching the median forecast in a Reuters poll of economists although it was below the BoE's latest projection of 2.4%.
Also, British house prices rose by an annual 2.2% in July, the fifth monthly rise in a row but the pace of increase cooled and was below a revised 2.7% increase in the 12 months to June, the Office for National Statistics said on Wednesday.
The ONS said house prices in London fell 0.4%.
Other indicators of Britain's property sector have shown a recovery as demand improved after a cut in borrowing costs.



Gold Extends Fall to Sixth Day ahead of Fed, US Inflation Data

A participant shows gold bars during the 21st edition of the international gold and jewelry exhibition at the Kuwait International Fairgrounds in Kuwait City on May 23, 2024. (Photo by Yasser AL ZAYYAT / AFP)
A participant shows gold bars during the 21st edition of the international gold and jewelry exhibition at the Kuwait International Fairgrounds in Kuwait City on May 23, 2024. (Photo by Yasser AL ZAYYAT / AFP)
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Gold Extends Fall to Sixth Day ahead of Fed, US Inflation Data

A participant shows gold bars during the 21st edition of the international gold and jewelry exhibition at the Kuwait International Fairgrounds in Kuwait City on May 23, 2024. (Photo by Yasser AL ZAYYAT / AFP)
A participant shows gold bars during the 21st edition of the international gold and jewelry exhibition at the Kuwait International Fairgrounds in Kuwait City on May 23, 2024. (Photo by Yasser AL ZAYYAT / AFP)

Gold extended losses for a sixth straight session on Wednesday to hover near the two-week lows hit the day before on lowered expectations of deeper rate cuts, as traders turned their focus to the Federal Reserve's meeting minutes and inflation data.

Spot gold fell about 0.2% to $2,617.79 per ounce by 1145 GMT, having touched its lowest level since Sept. 20 on Tuesday. US gold futures for December delivery was steady at $2,636.20.

"The precious metals sector seems somewhat disappointed after yesterday's meeting by China's National Development and Reform Commission, which reignited concerns about growth and demand from China in Q4. Also, gold is confronting the possibility of less aggressive rate cuts," Zain Vawda, market analyst at MarketPulse by OANDA, said, Reuters reported.

Non-yielding bullion is considered a safe investment and thrives in a low interest rate environment.

China is the world's largest consumer of gold, although record high prices and worries about economy have dampened consumer sentiment. A rebound in gold prices to a record peak also dashed the Indian bullion industry's expectations of a lucrative festival season.

Even after the losses, gold prices are set for an over 25% rise this year after prices hit a record peak of $2,685.42 on Sept. 26.

"The market is currently awaiting the upcoming inflation data for US. Since last week's payroll data, the market is discussing if we are in soft landing or no landing scenario," UBS analyst Giovanni Staunovo said.

The minutes from Fed's September policy meeting are due at 1800 GMT, while the US Consumer Price Index (CPI) and Producer Price Index (PPI) data is due on Thursday and Friday, respectively.

"A significant rise in inflation could alter the scenario. However, considering the geopolitical situation and market uncertainties, we might continue to see range-bound trading with limited downside rallies," said Vawda.

In other metals, spot silver steadied at $30.69 per ounce. Platinum held steady at $949.70 and palladium fell 1% to $1,011.51.