Welsh economist; Bank of England chief economist since Sept 2021
The Bank of England has kept Bank Rate at 3.75% in a split MPC vote, citing upside risks from energy prices linked to the Middle East conflict. Inflation is expected to rise later this year, with forecasts showing a potential peak around 3.2% before easing back toward the 2% target.
July saw only modest 0.1% month-on-month growth in UK house prices, with annual growth slowing to 1.8%. Affordability remains a challenge as mortgage rates rise amid geopolitical tensions. Northern Ireland leads price gains while the south and London lag. The Bank of England cautions inflation pressures could rise if the Iran conflict persists.
The United States has reached a historic debt level, driven by Iran tensions and tariffs. Higher debt issuance is lifting bond yields, pushing mortgage rates higher and increasing monthly payments. Homebuyers face a slower market as rates stay elevated amid near-record home prices, while employment remains strong and demand could rebound if rates ease.
Inflation in the UK has stayed elevated, driven by higher fuel and airfares, with analysts signaling the Bank of England will hold rates at 3.75% for a sixth straight meeting. A softer labour market and rising energy bills are shaping expectations for future moves.