Tag Archive for: Economic News

RBC’s Bold AI Gamble: Can Multibillion-Dollar Investments Transform Canada’s Banking Future?

RBC Bets Billions on AI: Will It Pay Off?

By Yvonne Lau | Published September 18, 2025

Canada’s largest company, the Royal Bank of Canada (RBC), bets billions on artificial intelligence (AI). The bank uses this bet to change its work and spark new growth. AI spreads through many fields. The financial services sector takes it in early. Yet, people now look for clear results. RBC must show that its large spending produces gains.

RBC’s Early AI Research

RBC began its AI work over ten years ago. Foteini Agrafioti started the project. She led Borealis AI Inc., the bank’s own research lab, from the start. Her love of machine learning grew during her PhD at the University of Toronto. In 2016, she launched Borealis AI. The bank let her team experiment with machine learning long before ChatGPT and similar tools appeared. She recalled, “Back then, AI was new, and we had room to learn without immediate need. The bank made a bold, early choice.”

Today, Borealis AI has about 950 data scientists and engineers. They study large sets of RBC’s financial data. Their goal is clear. They build new AI products to help the bank and improve customer service.

Ambitious Goals in a Changing Industry

The financial world uses AI fast, but doubts remain. Experts wonder if the current AI excitement will hold up. In response, RBC CEO Dave McKay sets high goals for AI work. He aims for up to $1 billion in extra revenue and cost savings by 2027. McKay stresses that RBC’s future depends on using data and AI well. The bank keeps spending around $5 billion each year on technology.

RBC: A World Leader in Bank AI

RBC’s effort shows. For the third year in a row, the bank ranks among the top three global financial firms for AI maturity. The Evident AI Index, a tool that checks innovation, research, patents, and skills in AI, confirms this. Toronto-Dominion Bank (TD) is the only other Canadian bank in the top ten worldwide. TD works closely with Toronto’s Vector Institute to build AI tools and grow talent.

Big Banks Face Hidden Hurdles

Being large does not make AI work simple. Alexandra Mousavizadeh, CEO of Evident Insights Ltd., explains that big banks have too many separate data pieces. “Big banks must move many pieces of data before AI can work smoothly,” she said. In this light, RBC’s early and steady investment in research and training at Borealis AI is key. Finance lecturer Jonathan Aikman at Queen’s University sees Borealis AI as the bridge that lets RBC turn raw data into useful insights and attract smart talent.

The Road Ahead

RBC speeds up its AI work as the industry watches. Many will note if the bank’s large spending gives it an edge and better service for customers. With Borealis AI inside and McKay’s bold money targets, RBC stands at the leading edge of banking’s digital shift. The road is not without risks. Yet the bank’s approach shows a strong belief in AI as a core part of future banking. The years ahead will show if this bet brings the rewards it promises and sets a guide for other banks in Canada and beyond.

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White House Supports Fed’s Prudent Rate Cut: Kevin Hassett’s Insights on Economic Strategy

Federal Reserve’s Quarter-Point Rate Cut Seen as a ‘Smart Move’ by White House Economic Advisor

September 18, 2025 — The Fed cut its borrowing rate by 0.25%. The White House sees the move as wise. White House advisor Kevin Hassett told CNBC on Thursday that the decision fits a careful style of managing the economy.

A Steady and Careful Move

The FOMC voted to drop rates by 25 basis points. Most members agreed. Some in the administration wanted a deeper cut. New Fed Governor Stephen Miran, known from the Council of Economic Advisers, pressed for a 50 basis-point cut. But the vote came out 11 to 1, and his view did not win.

Hassett said that the cut builds slow progress. He said policymakers will watch each new piece of data before they act again. On CNBC’s Squawk Box, he said:

“Moving kind of slow and steady and heading towards a target, watch the data come in, that’s what prudent policy is.”

He added that although Miran wanted a deeper cut, the 0.25% drop marks a sound start if further cuts are needed.

In the White House and Market

President Donald Trump, who picked Miran for the Fed, has not yet shared his view on this choice. In the past, Trump has been critical of the Fed and has pressed for faster and larger cuts. He even called Fed Chair Jerome Powell “Too Late” for a slow pace in meeting economic needs.

The president has asked for cuts up to 3 percentage points. His view stands apart from the latest FOMC plans. Trump often points to the slow U.S. housing market and the rising federal debt, which now nears $37 trillion.

Economic Prospects: Growth, Price Rise, and a Fine-Tuned Plan

Hassett pointed out that the Fed faces a tough task. The U.S. economy grew above 3% in the third quarter. Such growth usually makes a rate cut less likely. Yet, price rise stays above the 2% goal, although it shows signs of slowing down.

With mixed signals, Hassett said it makes sense for Fed members to look at all the models and listen to many views. He asked, “What can we do in an economy that is growing and has inflation slowing but still above target?”

Hassett called the 0.25% cut a careful balance—a move that shows hope without taking a big risk in pushing up prices.

Looking Ahead: Fed Chair Hints

Some see Kevin Hassett as a strong choice to take over from Jerome Powell next year. His words show a preference for a plan built on clear data and many opinions on the economy.

Summary of Key Points:

  • The Fed dropped its main rate by 0.25% as a careful measure.
  • White House advisor Kevin Hassett called the move smart.
  • Fed Governor Stephen Miran had asked for a 0.50% drop, but most members disagreed.
  • President Trump has often pushed for deeper cuts, though he did not comment on this move.
  • The U.S. economy grew over 3% even as inflation stayed above 2%.
  • Hassett stressed the need to view multiple data points and ideas.
  • Hassett is seen as a likely candidate for Fed Chair next year.

For more news on economic changes and the Fed’s plans, follow CNBC’s live updates and expert chats.

Watch the full interview with Kevin Hassett on CNBC’s Squawk Box for more in-depth details.

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Unlocking Economic Potential: How OSFI’s Relaxation of Lending Rules Could Propel Canadian Banks to Lend $1 Trillion

Canada’s Banking Regulator Explores Measures to Boost Business Lending Amid U.S. Trade War

By Barbara Shecter | Financial Post | September 17, 2025

Canada’s federal banking regulator, OSFI, considers new rules. OSFI wants Canada’s biggest banks to lend more to businesses. Canada faces economic challenges. A trade war with the U.S. makes change urgent.

Banks Could Potentially Lend an Additional $1 Trillion

Peter Routledge, OSFI’s head, spoke at a recent event. He noted that major banks built strong capital buffers during hard times. They earned these buffers during COVID-19 and after the 2023 Silicon Valley Bank collapse. Banks keep these buffers so they can lend more money. Routledge said banks could offer nearly $1 trillion in new loans. They would still meet capital rules. Compared to Canada’s $3-trillion economy, this sum is large. Routledge sees a chance to fund the country’s economic shift.

Potential Focus on Public-Private Infrastructure Projects

OSFI has not set final rules. One idea eases capital requirements on many business loans. These loans would support public-private projects. OSFI has taken similar steps before. In July, it lowered capital rules for life insurers investing in infrastructure. This idea fits a broader push to back key projects.

Leveraging System Resilience as a Catalyst for Growth

Routledge stressed the strength of Canada’s banking system. He pointed out that the system grew resilient after the 2008 crisis. The banks’ strong buffers can do more than protect. They can help fuel growth. Routledge asked banks to share ideas that boost lending without risky moves. He sees the system’s strength as a tool for supporting businesses and households. He stressed that well-run banks help keep credit and financial services available.

Trade War and Economic Adaptation

Canada faces a long-running trade dispute with the U.S. The Canada-U.S.-Mexico Agreement is up for review in July 2026. The U.S. Trade Representative has already started looking at the deal. Some expect the U.S. to press Canada for major changes. Despite these issues, Routledge stayed cautiously hopeful. He said the system’s strength might soften a tough trade outcome. He hoped for “maximum benefits and minimal costs” in negotiations. He added that Canada’s banks are ready to adjust when needed.

Canada’s Robust Financial System

Routledge pointed out that Canada’s financial system is more resilient than many others. He compared it to the U.S. system, where bank failures happen more often. He felt relief that shocks like the Silicon Valley Bank collapse in 2023 hurt the system only slightly. He admitted that future shocks are possible. OSFI works to keep the system both stable and flexible.

Government and Industry Outlook

Federal efforts are also in play. Ottawa launched a $5-billion fund to help businesses face trade war shifts. Together, government action and OSFI’s possible new rules form a two-pronged plan. This plan aims to boost resilience and get more business investments. As OSFI reviews its ideas, banks, businesses, and policymakers will watch closely. They want capital rules that balance risk with the need for more lending.

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Major Banks Lower Prime Rate to 4.70%: What It Means for Canadians Following Central Bank’s Cut

Canadian Banks Lower Prime Rate to 4.70%, Following Bank of Canada Rate Cut

September 17, 2025 – The Bank of Canada cuts its main rate. In response, Canadian banks lower their prime rate. They set it at 4.70% starting September 18. This rate drops 25 basis points from 4.95%. The change follows a quarter-point cut by the central bank to 2.5%.
• Banks act after the Bank of Canada signals a softer monetary plan.
• Royal Bank of Canada, Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, Bank of Montreal, Desjardins Group, National Bank of Canada, Laurentian Bank of Canada, Equitable Bank, and Bank of Nova Scotia agree with the move.

Impact of the Rate Cut

The prime rate guides many loans across Canada. It affects mortgage rates, personal loans, credit cards, and other variable-interest deals. Lowering the rate to 4.70% should ease borrowing costs. Consumers and businesses with variable loans may find relief in tighter conditions.
Analysts view this change as a quick fix for slowing inflation and steady economic growth. Banks and the central bank work together to boost spending and investments.

What Borrowers Should Know

Variable-rate borrowers will see lower charges soon. Homeowners with variable mortgages might pay less each month if their lender passes on the cut.
New borrowers may soon get better loan terms. Experts advise that borrowers watch future monetary moves. Banks may change rates again if economic data shifts.

Conclusion

Canada’s major banks now lower the prime rate. Their decision follows the Bank of Canada’s rate cut. This step shows a clear link between central bank actions and commercial lending. The goal is to ease credit and support the economy amid current challenges.

For more in-depth coverage and analysis, readers are encouraged to subscribe to the Financial Post, which provides ongoing updates on economic policy, market trends, and financial news across Canada.

Photo credit: Wikimedia Commons – Bank buildings in Toronto’s Financial District

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Heavy Truck Sales Plummet: Is the U.S. Economy Heading for a Recession?

Heavy Truck Sales Plunge—Is the U.S. Heading Toward a Recession?

September 17, 2025 — New data shows U.S. heavy truck sales fall fast. The U.S. Bureau of Economic Analysis reports that trucks weighing over 14,000 pounds now sell at levels unseen in four years.

Steep Decline in Heavy Truck Sales

In August 2025, truck sales dropped by over 15% from last year and by 21% compared with August 2023. This steep fall pulls worry from both economists and investors. Heavy trucks like tractor-trailers act as signs of industry strength. When truck demand grows, the manufacturing and construction scenes gain. When sales fall, the economy may slow down and enter a recession phase.

Historical Context and Economic Implications

Joe Brusuelas, chief economist at RSM, calls the trend important. He writes that the drop began in 2023 and needs a close look by policymakers.

  • During the Global Financial Crisis, truck sales dropped by more than 67% from their 2006 peak to the 2009 low.
  • In the early 2000s, as the dot-com burst hit, sales fell nearly 50% from late 1999 until 2002. These past numbers show a strong link between truck sales and overall economic work. Lower truck sales can come before a recession.

Is This a Traditional Signal or Something New?

Not all experts agree that lower truck sales clearly signal a coming recession. Paul Hickey, co-founder of Bespoke Investment Group, points out that the drop marks a slowdown in manufacturing. He also sees that today’s economy may work in different ways.

Hickey notes that while truck sales fall, the U.S. economy still grows. He sees a shift from manufacturing work toward more service and digital work. Many businesses now use online methods and technology as much as they rely on heavy industry.

As Hickey states, "Falling sales are often a recession indicator. The key word is often." His view reminds us that truck sales once gave a clear picture of the economy. New tech, like artificial intelligence and digital work, may change this picture.

What Lies Ahead?

Even after this drop, truck sales had returned near their peak after the pandemic. This makes the current fall stand out and may point to wider issues in the economy.

Investors and lawmakers now watch the next economic data. They want to know if this drop will pass or grow into a bigger issue.

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UK Inflation Holds Steady at 3.8% in August 2025: What It Means for the Bank of England and Households Ahead

UK Inflation Steady at 3.8% in August 2025: Implications for Bank of England’s Monetary Policy

The UK keeps its annual inflation at 3.8% for August 2025. The Office for National Statistics (ONS) released the data on Wednesday. The inflation figure meets economists’ hopes. The Bank of England stays alert and watches these numbers.

Inflation Details and Core Inflation Trends

  • Overall Inflation:
    The consumer price index (CPI) holds at 3.8% from July. This number stands against a 3.8% reading the month before. The BoE sees inflation close to its expected peak near 4% in September.

  • Core Inflation:
    Core inflation leaves out energy, food, alcohol, and tobacco. In August, core prices rise by 3.6% year-on-year, down from 3.8% in July. This small drop shows a slow shift in underlying prices.

ONS Chief Economist Grant Fitzner discusses price moves:

“Airfares drove prices down this month. Prices climbed less than one year ago after a big rise in July linked to the summer holidays. At the same time, prices at the pump rose, and the cost of hotel stays fell less than last year.”

Food prices go up for the fifth month in a row. The ONS sees small rises in vegetables, cheese, and fish items. These small jumps add to the overall inflation.

Economic and Market Response

Finance Minister Rachel Reeves speaks of household challenges:

“I know many families find life tough, and the economy may seem stuck. I want to bring costs down and help those who face high bills.”

After the inflation news, the British pound falls a bit against the US dollar. It trades at about $1.3637.

Bank of England’s Position on Interest Rates

Inflation stays a weighty point in the BoE’s choices. In August, the bank cut the interest rate from 4.25% to 4%. This move shows care in easing money rules while supporting growth and investment.

The BoE plans to keep rates unchanged at its meeting on Thursday. Some experts doubt a rate cut in November. Scott Gardner, Investment Strategist at Nutmeg and part of J.P. Morgan’s digital team, notes:

“Sticky inflation stops a fourth rate cut this year. Though wage gains slow, the inflation drop must continue before policymakers feel safe to cut rates again. A fourth cut would need signs that the labour market is soft—a win that brings its own costs.”

Gardner adds that a near-term rise in inflation toward 4% may push living costs up for households. He hints that “sticky inflation is likely to stay long.”

Looking Ahead

  • The BoE holds a careful view, seeing inflation match or exceed forecasts even after rate cuts.
  • Families feel pressure from high food and fuel costs.
  • Both markets and households wait on further news and signals from the BoE in the coming months.

This unfolding story shows the tight task for UK leaders. They work to keep inflation in check while still pushing the economy forward.

This is a developing news story. Further updates will follow.

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Anticipated Trade Deal with China: Treasury Secretary Bessent’s Optimism Ahead of November Tariff Deadline

Trade Deal with China Likely Before November Reciprocal Tariff Deadline, Says Treasury Secretary Bessent

In a CNBC interview, U.S. Treasury Secretary Scott Bessent felt hope. He sees a trade deal with China on the way. He adds more talks will occur before the November deadline. The deadline triggers new reciprocal tariffs.

Anticipated Talks Ahead of November Deadline

Bessent stressed that U.S. and China talks are now productive. He said on Squawk Box, “We’ll be seeing each other again.” His words show that Chinese officials see a chance to agree. The talks follow months of tense debate and shifts in stance. They began on April 2 when former President Trump announced "liberation day" tariffs on many global partners, including China.

At first, the plan was to impose tariffs as high as 145% on Chinese goods. The measures were put on hold to keep talks open. This pause would have ended on August 12 but was stretched to November 10 by the Trump team, giving both sides more time to discuss.

Impact on Global Markets and Trade Deficit

Bessent said that U.S. trading partners worry because Chinese goods flood their markets. One partner remarked, “They don’t know what to do about it.” He described markets that are upset with the quick flow of imports.

Bessent noted that in 2024, the U.S.-China trade gap reached almost $300 billion. By July 2025, the gap dropped to $128 billion. U.S. Trade Representative Jamieson Greer projects a gap reduction of at least 30% this year. He expects the trade gap to shrink further in 2026. ### Aiming for Fair and Balanced Trade

Bessent said, “Our goal is to come into balance, to have fair trade.” The deal is meant to fix trade gaps. It also sets fair rules for commerce between the two large nations.

Tensions and talks go on. Global markets watch each move. The tariff pause shows that both sides want a solution. This change may start a new era in U.S.-China trade relations.

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High Stakes: U.S.-China Trade Talks Intensify Amid Nvidia Probe and TikTok Deadline

Nvidia Probe and TikTok Deadline Loom Over U.S.-China Trade Talks

Madrid, September 15, 2025 — Trade talks between the United States and China stretch into a second day in Madrid. The discussions focus on TikTok’s role, tariff levels, and export controls. Tensions rise as new probes and tight deadlines add weight to decisions. Each word links closely to the next, making every connection count in this debate.

Progress and Challenges in Ongoing Negotiations

In the fourth round of talks over the past four months, the U.S. team sends Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer. China stands with Vice Premier He Lifeng and lead trade negotiator Li Chenggang. In May, both sides agreed to pause harsh tariffs and lift some limits. Today, they build on that step to ease trade strain.

Bessent said both sides made good headway on small details. They near an agreement on TikTok’s status in the United States. He stressed, “Our Chinese counterparts asked hard things. We will see if we can meet that. We are not ready to risk national safety for a social media app.”

TikTok Deadline and Its Significance

TikTok, owned by Beijing’s ByteDance, faces a hard deadline on Wednesday. The company must close a deal to keep operating in the U.S. Its recommendation code sits at the center of these talks. Washington wants more limits on how it runs, while Beijing has put this tech under export rules.

The app holds a key spot in politics and culture, especially for young American voters. Neo Wang, a lead China strategist at Evercore ISI, said Beijing might agree to Trump’s needs on TikTok if that cuts U.S. tariffs by 10% or more.

Rising Tensions: Investigations and Regulatory Actions

Troubles mount on both sides. Over the weekend, China began two probes of the U.S. semiconductor industry:

• An anti-dumping probe on some U.S.-made analog IC chips.
• An anti-discrimination inquiry into U.S. measures that target China’s chip work.

These probes came after the U.S. added 23 China-based firms to its watch list last Friday.

On Monday, China’s market regulator said an early review found Nvidia violated the country’s law on unfair competition. More checks on the U.S. chip maker are planned. George Chen, partner at The Asia Group, said Nvidia now plays a role in moves by both sides. He sees the long probe as a tactic from China.

Diplomatic Maneuvers and Future Engagements

Officials also plan to talk about a possible meeting between U.S. President Donald Trump and Chinese President Xi Jinping later this year. Reports state that Beijing wants Trump to visit China for the first state trip since 2017. Success in that meeting may depend on today’s decisions and on solving the TikTok issue.

Broader Implications and Reactions

Wendy Cutler, former U.S. trade representative and head of the Asia Society Policy Institute, called the talk style before the Madrid rounds “not encouraging.” She warned that China will likely ask for a rollback of new limits during Trump’s second term.

She added that the economic ties between the nations seem stuck. Both sides trade with limits on exports and tech.

Meanwhile, China’s Ministry of Commerce criticized Trump’s call for the European Union to impose up to 100% extra tariffs on China for its purchases of Russian oil. The ministry called the move a clear case of one-sided economic bullying and said it would act to guard its interests.

Outlook

As the U.S. and China work through trade disputes—amid tariff fights, technology rules, and social media debates—observers watch with care. The coming days in Madrid will shape the path of one of the world’s most important trade links.

For continuous updates on U.S.-China trade talks and related developments, stay tuned to CNBC.

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Empowering Housing: CMHC’s Vision for Increased Bank Risk-Taking in Construction Financing

CMHC Head Emphasizes Continued Importance of Crown Corporation in Canadian Housing Sector

By Garry Marr | Published September 12, 2025

At a recent industry conference in Toronto, Coleen Volk, president and CEO of Canada Mortgage and Housing Corporation (CMHC), made a clear point. She stressed that the Crown corporation plays a key role in Canada’s housing challenges. Volk spoke at the Canadian Apartment Investment Conference. She linked private banks with new funds for residential building. At the same time, she reassured us that CMHC stands by the housing market by taking smart risks.

Welcoming More Risk from Banks in Housing Finance

Volk wants banks to take more risks when they finance housing projects. She said, “We would love to see the banks taking more risks,” during a one-on-one Q&A with Ana Bailão, an affordable housing advocate and former Toronto mayoral candidate.
Today, about 88 percent of housing projects rely on CMHC mortgage insurance. This data shows that banks are careful. Volk’s words show that CMHC hopes to share risk more evenly with private lenders. This change may bring new money to build homes.

Regulatory Environment and Risk Considerations

Volk explained that OSFI, the Office of the Superintendent of Financial Institutions, watches over CMHC. Recently, OSFI raised the capital rules for the corporation. Volk said, “We don’t want that to limit our ability to do good things in the marketplace.” Her words tied the need for balance between safe risk-taking and meeting housing needs.
CMHC sees that the nation does not build enough homes. Its chief economist linked this problem to only half the needed annual housing starts. New data showed that in the first half of 2025, housing starts across the country fell compared to 2024. Toronto, in particular, sees its housing starts drop to a three-decade low.

CMHC’s Role Amidst New Government Housing Initiatives

Volk spoke about Ottawa’s Build Canada Homes program. This new plan will boost federal activity in building affordable, or “deeply affordable,” homes. Volk compared it to the Canada Infrastructure Bank. She noted that Build Canada Homes will work mostly outside CMHC’s usual area.
She made clear that CMHC will keep its own affordable housing programs, some of which are 30 years old. Build Canada Homes will focus on larger affordable housing projects. Volk said, “If they are taking over things that we did, it would be from that end of the spectrum, the more affordable end.” Meanwhile, CMHC will handle market housing.

Continuing Support for Rental Apartment Construction

CMHC also backs its Apartment Construction Loan Program. This program gives developers low-cost funds to build rental apartments across Canada. Volk said, “We are really firing on all cylinders there.” She linked her optimism to a plan to double the funds for this initiative.
She challenged the notion of two separate markets for affordable and market housing. Her words tied the two segments together. Volk stressed that both CMHC and Build Canada Homes will serve similar clients in a mixed housing market.

Conclusion

Coleen Volk’s remarks at the conference tied CMHC’s role firmly to Canada’s housing market. Her words link private banks with new funding, while CMHC’s leadership keeps pushing for more housing supply. The message is clear. Despite tighter rules and a national housing shortage, CMHC will keep supporting both rental and affordable housing projects.

For further details, reach out to Garry Marr at gmarr@postmedia.com.

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UK Economy Stalls: Implications of July’s Stagnation Ahead of Upcoming Autumn Budget

UK Economy Stalls in July as Signs of Slowdown Emerge

In July the United Kingdom’s economy did not grow. The numbers now point to a slowdown that puts more strain on Chancellor Rachel Reeves. She prepares for the Autumn Budget on November 26, 2025. The Office for National Statistics shared the data on Friday. The report shows no growth in July. It matches economists’ checks and slows down from the 0.4% rise in June.

Key Highlights from the Economic Data

  • Stagnation in July: The economy stayed the same in July. There was no drop; there was no rise.
  • Sector Performance:
    • Production output fell by 0.9%
    • Services and construction moved up by small steps.
  • Quarterly Growth Trends:
    • Growth in the second quarter of 2025 came in at 0.3%
    • This is lower than the 0.7% seen in the first quarter
  • Economic Outlook: Economists now see a slower pace for the UK later in 2025. ### Expert Perspectives

Sanjay Raja from Deutsche Bank, who acts as the lead UK economist, said:
"After a strong second quarter that showed the fastest growth among the G7, all ties now suggest a slowdown in the second half of the year." He connects this with shifts in trade, stockpiling behavior, changes in net purchases of precious metals, and cuts in public sector spending.

Paul Dales from Capital Economics, the chief UK economist, added:
"The flat real GDP in July shows that the economy is finding it hard to get back on track after past tax rises and hints of more in the Autumn Budget." He thinks any later tax rises will face close watch for their effect on growth.

Fiscal and Monetary Challenges Ahead

For Chancellor Rachel Reeves, who keeps the economy’s revival and spending control in view, the flat growth comes at a sensitive time. Reeves vows that spending will use tax money and not more debt. She wants to cut the UK’s debt in the coming years. Slower growth now makes these aims tougher to reach.

At the same moment, the Bank of England works between higher inflation and softer growth. Inflation hit 3.8% in July. The rise broke past forecasts and makes some worry that cuts to interest rates may pause.

Fabio Balboni from HSBC, a senior European economist, shared last week:
"Inflation staying high makes it tough for the bank to cut rates further. At the same time, fiscal issues grow as big deficits and stiff choices build up for the Autumn Budget."

Bank of England Interest Rate Outlook

The Monetary Policy Committee at the Bank of England will meet on September 18. In August, they lowered rates by 25 basis points to 4%. The split vote of 5–4 means that the bank is most likely to keep rates as they are now. Many now peer to the meeting on November 6. It comes just before the Autumn Budget and may mark a new step for money policy.

Carsten Brzeski, ING’s global head of macro, said:
"We still see a rate cut in November, though the firm tone seen in August makes us less sure of that idea."

Looking Ahead

Economic growth has slowed and inflation stays high. At the same time, uncertainty about government spending grows. The UK now faces many hurdles as it moves toward the end of 2025. Chancellor Reeves’ Autumn Budget stands as a key moment while the government seeks to balance growth with a strict fiscal plan. All this happens as global conditions stay cautious.

For ongoing updates and expert analysis on the UK economy and financial markets, stay tuned to CNBC and other leading financial news providers.

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