2025-03-20 13:00

LONDON, March 20 (Reuters) - The Bank of England held interest rates at 4.5% on Thursday and warned against assumptions that they would fall over its next few meetings, as policymakers grapple with deep uncertainty hanging over the British and world economies. The rate-setting Monetary Policy Committee voted 8-1 to keep rates on hold, with only external member Swati Dhingra voting for a quarter-point cut. Economists polled by Reuters had mostly forecast an 7-2 vote to keep rates unchanged. Sign up here. Sterling initially trimmed an earlier fall but slowly retreated to $1.2955, down 0.4% on the day and little changed from levels seen just before the rate decision , while London's blue-chip FTSE stock index (.FTSE) , opens new tab extended its fall to trade 0.3% lower. And in bond markets, the rate-sensitive two-year gilt yield was last down 3.3 basis points on the day at 4.17% versus 4.15% just before the BoE announcement. COMMENTS: JESSICA HINDS, DIRECTOR IN FITCH RATINGS’ ECONOMICS TEAM, LONDON: "The decision to hold rates today was never really in doubt and the large majority voting in favour of it came as no surprise either. Both the minutes and comments from Andrew Bailey suggest that the MPC still plans to cut rates further this year. Our view is that the MPC will cut another three times this year, with the next move in May alongside fresh growth and inflation forecasts. But the minutes also suggested that pay growth will remain key to future MPC decisions, and Committee members will presumably want to see falls in wage growth from current high levels before reducing the restrictiveness of monetary policy." DEAN TURNER, CHIEF EURO ZONE ECONOMIST, UBS GLOBAL WEALTH MANAGEMENT, LONDON: "The Bank of England's decision to hold rates steady, with a vote split of 8-1, was a slightly more hawkish vote split than many assumed, but no change to rates is in line with expectations." "As noted in the minutes, policy uncertainty remains high, with a particular nod given to 'global trade policy uncertainty'. Although news flow on the domestic economy hasn’t provided much new news for policymakers, next week's Spring Statement is likely to see the Chancellor announce spending cuts, which may weigh on the economy." "Unlike Germany, where the dramatic shift in fiscal policy has brightened the economic outlook, the UK has limited capacity to increase spending without abandoning its self-imposed fiscal rules." JEREMY BATSTONE-CARR, STRATEGIST, RAYMOND JAMES INVESTMENT SERVICES, FRANCE: "In the face of vast uncertainty bearing down on the UK economy’s outlook, rate-setters have rightly chosen to tread cautiously." "The Bank’s rate setters are trapped by dual pressures of boosting the economy, while still keeping the base rate sufficiently restrictive so as to curb inflation. Does the Bank’s caution, coupled with rising inflation over the spring and summer, rule out further rate cuts in the near future? Not necessarily." "Ultimately, the Monetary Policy Committee will have to decide whether prevailing downside and upside risks are temporary, and if so, a calibrated loosening of the policy is possible." YAEL SELFIN, CHIEF ECONOMIST, KPMG UK: "Today’s decision to keep interest rates unchanged comes amidst a backdrop of heightened domestic uncertainty ahead of next month's increases in labour and energy costs. Data has also been limited since the February meeting, particularly with the absence of updated forecasts. This strengthened the case for the Bank to maintain its cautious approach and keep interest rates on hold." "Recent external developments are also contributing to the uncertain outlook. Downside risks to growth from potential tariffs have increased, while they also pose an upside risk to inflation if sterling weakens, causing higher import costs." "Nonetheless, the meeting minutes suggest there is a clear easing bias, despite eight MPC members voting to keep rates unchanged... We expect the Bank to be able to resume cutting interest rates in the upcoming May meeting as it digests the updated forecasts and data over the coming weeks. Overall, we expect base rates to fall to 4% by the end of 2025." ZARA NOKES, GLOBAL MARKET ANALYST, JPMORGAN ASSET MANAGEMENT: "The Bank of England is stuck between a rock and a hard place, with inflationary pressures mounting alongside a weak growth outlook. While it may have been tempting for the Bank to cut rates today, ultimately the decision to hold was appropriate." "Inflation and wage growth remain sticky and inflation dynamics do not look favourable in the near term as employer tax hikes, price resets and a minimum wage increase all come into effect in April. Some business surveys are sending a weak signal on the employment side, but this morning’s data suggests that the labour market is still holding up. The Bank would be taking a risk to assume that softer surveys will feed through to the hard data and should therefore remain laser-focused on the inflation threat." LINDSAY JAMES, INVESTMENT STRATEGIST, QUILTER, LONDON: "Given the continuing uncertainty faced, particularly with expectations for peak 2025 inflation shifting significantly higher to 3.7% at the previous MPC meeting, the Bank's decision was taken somewhat out of its hands." "While energy prices have fallen somewhat since then, there remains very little clarity on President Trump's tariffs and there is a risk that they could prove to be further inflationary." "Market expectations are currently pricing in around two cuts for the remainder of the year, mirroring expectations for the U.S.. The Bank of England will wish to avoid cutting rates too much too quickly for fear of causing further inflationary pressure, so for now, this looks reasonable." MICHAEL FIELD, CHIEF EQUITY STRATEGIST, MORNINGSTAR: "In the wake of Trump tariff threats, and inflation spiking once again in the UK to 3%, the slow and steady approach to rate cutting makes sense. Rates are down 75 basis points from their peak, and the Bank of England has been very clear in communicating that it wishes to bring down rates further - something that is currently being appreciated by equity investors, with the FTSE close to all-time highs." "We still see plentiful equity market opportunities for investors in the UK and believe further interest rate cuts over the course of 2025 will lighten the load for consumers and businesses alike. This should create a more supportive economic backdrop for commerce generally." https://www.reuters.com/world/uk/view-boe-keeps-rates-steady-sterling-trims-falls-2025-03-20/

2025-03-20 12:59

LONDON, March 20 (Reuters) - The Bank of England held interest rates at 4.5% and warned against assumptions that they would be cut over its next few meetings as it grappled with deep uncertainty hanging over the British and world economies. Noting the escalation of global trade tensions kicked off by the United States, the Monetary Policy Committee voted 8-1 to keep rates on hold with only external member Swati Dhingra voting for a quarter-point cut. Sign up here. Economists polled by Reuters had mostly forecast an 7-2 vote to keep rates on hold. "There's a lot of economic uncertainty at the moment," Governor Andrew Bailey said in a statement. He said the BoE still thought rates were on a gradually declining path but it would look "very closely at how the global and domestic economies are evolving at each of our six-weekly rate-setting meetings." The Monetary Policy Committee said it still expected inflation pressures would continue to ease but "there was no presumption that monetary policy was on a pre-set path over the next few meetings." All 61 economists polled by Reuters before the BoE's March meeting had predicted it would keep Bank Rate on hold at 4.5% with the next cut likely in May with further reductions in August and November. The MPC repeated its guidance made in February that it was taking a "gradual and careful approach" to further rate cuts. It said global trade policy uncertainty had intensified after the United States made a range of import tariff announcement which prompted retaliation from some other countries. The U.S. Federal Reserve on Wednesday cut its economic growth forecasts for this year, raised its inflation projection and said the uncertainty hanging over the economy had increased as it kept borrowing costs on hold. The BoE said "other geopolitical uncertainties have also increased" and it noted Germany's huge borrowing plans. At home, the British government's imminent tax hike for employers was probably behind price increases in the services sector, the committee said and it noted surveys suggesting weakness in hiring intentions by businesses. The BoE slightly increased its forecast for a peak in inflation this year which it now put at 3.75% in the third quarter, up slightly from its estimate in February of 3.7%. With UK inflation stuck firmly above its 2% target - it rose to 3% in January - the BoE has cut borrowing costs by less than the European Central Bank and the Fed since last summer, contributing to the country's sluggish growth rate. The central bank also nudged up its estimate for economic growth in Britain in the first three months of 2025 to 0.25% from a previous projection of an increase 0.1%. Also on the MPC's radar is finance minister Rachel Reeves' budget update speech next Wednesday in which she is expected to announce cuts to public spending plans, a big component of Britain's economic growth outlook. Earlier on Thursday, the Swiss National Bank cut rates by 25 basis points as it focused the risk of trade wars for inflation and the global economy. Sweden's central bank kept its policy rate unchanged. (([email protected] , opens new tab)) Keywords: BRITAIN BOE/ https://www.reuters.com/markets/rates-bonds/bank-england-keeps-rates-hold-warns-against-assumptions-cuts-face-uncertainty-2025-03-20/

2025-03-20 12:55

EU counter-tariffs had been in two batches for April 1 and 13 Sefcovic says discussions with U.S. yielded limited progress Broader set of 'reciprocal' U.S. tariffs due on April 2 French and Italian PMs caution against escalating trade dispute BRUSSELS, March 20 (Reuters) - The European Union has delayed its first counter-measures against the United States over President Donald Trump's metals tariffs until mid-April, allowing it to re-think which U.S. goods to hit and offering extra weeks for negotiations. The European Commission had proposed re-imposing 2018 tariffs on 4.5 billion euros ($4.9 billion) of U.S. products on April 1, followed by hitting a further 18 billion euros of U.S. goods on April 13. Sign up here. "We are now considering to align the timing of the two sets of EU counter-measures so we can consult with member states on both lists simultaneously, and this would also give us extra time for negotiations with our American partners," European Trade Commissioner Maros Sefcovic told a hearing at the European Parliament on Thursday. The commission subsequently confirmed all EU counter-measures would take effect in mid-April. The first set of counter-measures includes applying a 50% tariff on U.S. bourbon. Trump threatened to slap a 200% tariff on all wines and other alcoholic products coming from the EU if the bloc went ahead with this. The Trump administration is also planning "reciprocal" tariffs on April 2 to rebalance the global trading system. Sefcovic indicated that he had made limited headway with U.S. counterparts in talks so far, such as on his proposal to discuss on lowering import duties on industrial goods. "I don't think that the U.S. thinking is in that direction," he said, adding its priority appeared to be to draw investment and re-industrialise. "And currently they believe that the best way to do this is through the tariff policy. I hope that one day we will get to this discussion, but currently we are clearly not there," he said. The counter-measure delay could allow for some adjustment to the U.S. goods targeted. French Prime Minister Francois Bayrou said on Sunday that the EU was probably mistaken in targeting American whiskey, while Italian Prime Minister Giorgia Meloni cautioned EU partners on Tuesday against escalating the trade dispute with the United States. "I am not certain that responding to tariffs with more tariffs is necessarily a good deal," Meloni, who is close to Trump, said. France and Italy are the largest exporters of wine to the United States. Prime Minister Micheal Martin of Ireland, a major whiskey exporter, said on Thursday it was sensible that Europe was giving itself time after April 2 to assess the U.S. package of measures and then "wisely and strategically respond". ($1 = 0.9217 euros) https://www.reuters.com/markets/europe/eu-may-delay-first-set-counter-tariffs-against-us-mid-april-2025-03-20/

2025-03-20 12:49

Traders trim expectations of further rate cuts BoE vote split, statement seen as slightly hawkish Short-dated gilt yields rise LONDON, March 20 (Reuters) - UK markets dialled down wagers on further Bank of England rate cuts on Thursday after the central bank held borrowing costs and stressed the high levels of uncertainty facing policymakers over potential U.S. tariffs. Gilt yields rose and the pound initially trimmed its losses. Investors also had half an eye on Finance Minister Rachel Reeves' spending statement next week and global factors from doubts about U.S. growth to rising government spending in Europe. Sign up here. The BoE's Monetary Policy Committee held rates at 4.5% as expected in an 8-1 vote, with only external member Swati Dhingra voting for a quarter-point cut. Investors had broadly anticipated a 7-2 split and took the change as one of a few signs that the BoE is in no hurry to cut again. It has cut rates three times in the current cycle. The central bank said "there was no presumption that monetary policy was on a pre-set path over the next few meetings", although it still expected inflation pressures would continue to ease. That has "put a little bit of doubt in minds about whether the May meeting is as live as people thought," said Matthew Amis, investment director at aberdeen. "From here it's really data watching, and listening to what the MPC members say in the next six weeks as to whether they really build on that line in the minutes." Short-dated government bond, or gilt, yields reversed an earlier fall and were last up two basis points at around 4.23%, from 4.15% before the decision. Yields move inversely to prices. Money markets last priced in around 48 bps of rate cuts by year-end, versus roughly 54 bps previously. Sterling initially rose after the decision, but was last down 0.3% at $1.2962 against a broadly-firm dollar. UNCERTAINTY THE ONLY CERTAINTY "It makes sense from a policymaker standpoint not to do anything when times are so uncertain," Neil Mehta, fixed income portfolio manager at RBC Bluebay, said of the BoE decision. "When you have the policy uncertainty emanating from the U.S., policy uncertainty domestically, combined with (UK) data that still looks as if we're muddling through, it just makes sense not to do anything." London's FTSE-100 stock index (.FTSE) , opens new tab traded 0.14% lower, down slightly from the morning session but outperforming European markets where equities slid. Reeves' Spring statement next Wednesday meanwhile poses a risk to Britain's volatile government bond market. Ten-year gilt yields - a proxy for government borrowing costs - surged above 4.9% in January to their highest since 2008, as concerns about sticky UK inflation and high government borrowing combined with a global selloff. Growth has been anaemic in recent months and price pressures have picked up, leading the BoE to increase its forecast for a peak in inflation this year to 3.75%. Inflation was at 3% in January. "The Bank of England does stand out in terms of a lack of progress on inflation," said Steven Bell, managing director and chief economist for EMEA at Columbia Threadneedle. Switzerland cut rates again on Thursday, while the U.S. Federal Reserve left rates unchanged on Wednesday. Bell said the prospect for significant rate cuts in the UK were lower than elsewhere, making him mildly positive on sterling. The pound rose to an almost five-month high above $1.30 earlier in the session, boosted by recent dollar weakness. Nick Rees, head of macro research at Monex Europe, said the BoE remained in a relatively good position given it has not rushed into cutting rates and the UK is less exposed to tariffs than Europe. "They have the advantage of being able to watch and wait and see what happens elsewhere, and then they can move a little bit later." https://www.reuters.com/markets/currencies/pound-dips-18-week-high-before-bank-england-decision-2025-03-20/

2025-03-20 12:45

Central bank easing meets global caution BoE keeps rates steady, SNB cuts on Thursday BOJ remains the G10 outlier March 20 (Reuters) - Big developed market central banks are turning cautious after a series of interest rate cuts and as uncertainty in global economics and politics grows. Of five central banks that met this week, only Switzerland's cut rates, though traders see further easing in the United States and Britain, while Japan remains in hiking mode. Sign up here. Here's a look at where 10 big central banks currently stand: 1/ SWITZERLAND The Swiss National Bank cut interest rates by 25 basis points (bps) to 0.25% on Thursday, leaving borrowing costs just above zero. This was the fifth successive cut since the SNB started lowering rates from 1.75% a year ago. Markets see no further reductions from here, notable because the SNB has been the most dovish developed market central bank. Still, policymakers have not ruled out a return to negative rates. 2/ CANADA The Bank of Canada cut its key interest rate by 25 bps to 2.75% last week, its seventh consecutive reduction. It plans to "proceed carefully with any further changes" given concerns about inflationary pressures and weaker growth. Economists say the risk of a tariff-induced recession will keep the BoC in easing mode. Markets price almost two more 25 bps rate cuts by year-end. 3/ SWEDEN Sweden's central bank left rates at 2.25% on Thursday, and said it expects to keep them at this level for now. The Riksbank has been firmly in the dovish camp, easing its key rate from 4% to support a sluggish economy. But with inflation still above its 2% target, markets agree with policymakers that further cuts are unlikely. 4/ NEW ZEALAND The Reserve Bank of New Zealand slashed the official cash rate by half a point to 3.75% last month, having cut rates by a total of 175 bps in seven months. RBNZ Governor Adrian Orr, who has since resigned, had suggested further cuts of 25 bps in April and May which would leave rates in a neutral range. Market pricing is broadly aligned with that. 5/ EURO ZONE The European Central Bank lowered rates earlier this month to 2.5%, its sixth cut since June. The ECB, however, warned of uncertainty including the risk of rising inflation due to a trade war and more defence spending. Policymakers see a growing chance of an easing pause in April, before rates fall again, four sources told Reuters after the March meeting. 6/ UNITED STATES The Federal Reserve kept rates steady on Wednesday, and maintained projections for two further rate cuts this year, though warned of "unusually elevated" uncertainty. Chair Jerome Powell said President Donald Trump's policies, including extensive import tariffs, appear to have tilted the economy toward slower growth and at least temporarily higher inflation. Trump said in a social media post: "The Fed would be MUCH better off CUTTING RATES". Markets price in two more rate cuts this year, with a small chance of a third. 7/ BRITAIN The Bank of England held interest rates steady at 4.5% on Thursday, and said while it thought rates were on a gradually declining path it would look "very closely at how the global and domestic economies are evolving." With inflation stuck firmly above its 2% target the BoE has been more cautious than many peers. It has cut rates by 75 basis points since it started easing in mid 2024. Markets expect two more 25 basis point cuts this year. 8/ AUSTRALIA The Reserve Bank of Australia cut rates in February for the first time this cycle mainly due to the risk of keeping policy too tight for too long. A strong labour market, however, has made the RBA cautious about further easing and the decision to cut was finely balanced, the minutes of that meeting showed. Markets price in two more rate cuts this year. The RBA says this could be too many. 9/ NORWAY Norway's central bank has held rates steady since late 2023, though its governor said in February it is "approaching the time when we can ease monetary policy a little." Markets don't see a cut as likely until at least June, and will watch Norges Bank's March 27 meeting when it updates its rate projections. 10/ JAPAN A perennial outlier, the Bank of Japan is in a rate hiking cycle, but it too kept rates steady on Wednesday. The domestic wage and inflation picture suggests further tightening is likely and markets price at least one 25 bps increase by year-end. Still, Governor Kazuo Ueda warned of heightening global economic uncertainty, suggesting the timing of further hikes will be influenced by the fallout from U.S. tariff policy. https://www.reuters.com/markets/rates-bonds/global-markets-central-banks-graphic-2025-03-20/

2025-03-20 12:31

LONDON, March 20 (Reuters) - Private equity group Carlyle (CG.O) , opens new tab is seeking a buyer for its Colombian oil producer SierraCol for around $1.5 billion, according to people with knowledge of the matter. Carlyle set up SierraCol in 2020 after buying assets from Occidental Petroleum and its production of 45,000 barrels of oil equivalent per day make it the largest independent producer in Colombia. Sign up here. Its free cash flow in the 12 months to September was $172 million and net debt stood at $511 million last year, according to a presentation on SierraCol's website. Carlyle declined to comment. It has over the past decade acquired, grown and sold several oil and gas companies, including Neptune Energy in the North Sea and Assala Energy in Gabon. Five years is a usual time frame for private equity funds to monetise assets after upgrading them by, for example, increasing the reserve base of fields and setting them up for further growth. A deal for it to buy assets in Italy, Egypt and Croatia from Energean (ENOG.L) , opens new tab to create a Mediterranean-focused oil and gas producer is in jeopardy as a crucial regulatory approval from Italy remains outstanding. https://www.reuters.com/business/energy/carlyle-seeks-buyers-colombian-oil-producer-2025-03-20/