With outlook uncertain, the Bank of England joins the US Fed in putting interest rates on hold

News

With outlook uncertain, the Bank of England joins the US Fed in putting interest rates on hold

2025-03-20 20:58 Last Updated At：21:00

LONDON (AP) — The Bank of England kept its main U.K. interest rate unchanged at 4.50% on Thursday even though the economy is barely growing and the nation faces more uncertainty in light of the tariff policies being enacted by the Trump administration in the U.S.

The decision by the nine-member Monetary Policy Committee was widely expected, and comes a day after the U.S. Federal Reserve also kept interest rates unchanged.

Minutes from the meeting showed that eight members voted to keep policy unchanged, with one backing a quarter-point reduction.

The rate-setting panel has reduced the Bank of England’s main rate from a 16-year high of 5.25% by a quarter of a percentage on three occasions since last August, most recently in February, after inflation fell from the multi-decade highs of over 10% reached in the wake of the sharp spike in energy prices following Russia's full-blown invasion of Ukraine in early 2022 .

However, inflation, at 3%, remains above the bank’s 2% target and is set to push higher in coming months, even without accounting for any tariffs imposed by the Trump administration. Many economists think it could rise as high as 4% in the coming months as businesses are raise prices as a result of a big increase in the minimum wage and higher payroll taxes.

“There’s a lot of economic uncertainty at the moment," said Bank Gov. Andrew Bailey. “We still think that interest rates are on a gradually declining path, but we’ve held them at 4.5% today.”

If policymakers continue to pursue their recent gradual approach, then another cut is likely in May, when they will be armed with the bank’s latest economic projections and Bank Gov. Andrew Bailey next holds a press conference.

Bailey said rate-setters will be “looking very closely at how the global and domestic economies are evolving” and that whatever happens, "it’s our job to make sure that inflation stays low and stable.”

The U.S. Federal Reserve, which kept borrowing rates unchanged Wednesday, also expressed uncertainty about the near-term economic outlook, particularly in light of U.S. President Donald Trump’s tariff policies, which economists worry would lower global growth and lead to an uptick in prices.

The British economy, the sixth-largest, eked out modest growth of 0.1% in the fourth quarter, a hugely disappointing outcome for the new Labour government, which has made boosting growth its number one economic policy. Since the global financial crisis in 2008-2009, the British economy’s growth performance has been notably below its long-run average.

Critics say Treasury chief Rachel Reeves is partly responsible for the gloomy economic news since Labour returned to power in July after 14 years, because she was overly downbeat when taking on her role and has since increased taxes, particularly on businesses.

Reeves, who on March 26 will deliver a keenly-watched statement on the state of the public finances to lawmakers, will be hoping that the Bank of England does cut borrowing rates further over coming months as it will likely help shore up growth.

Economists said the latest update from the bank did little to clear up the outlook, though most said a further quarter-point reduction in May remained on the cards.

“But beyond that, much will depend on trade policy out of the U.S. and the fiscal announcements coming from the Chancellor,” said Luke Bartholomew, deputy chief economist at asset management firm Aberdeen.

Israel intensifies attacks in Gaza and strikes ports in Yemen as Trump wraps up trip to region

2025-05-17 00:03 Last Updated At：00:10

DEIR AL-BALAH, Gaza Strip (AP) — Israel launched dozens of airstrikes across northern and southern Gaza on Friday, killing more than 93 people and wounding hundreds -- attacks that Israeli officials described as a prelude to a larger military campaign in the territory aimed at pressuring Hamas to release hostages.

Also on Friday, Israel struck two ports in Yemen that it said were used by the Houthi militant group to transfer weapons.

The strikes in Gaza followed days of similar attacks that killed more than 130 people, according to Gaza’s Health Ministry, and came as U.S. President Donald Trump wrapped up a visit to Gulf states — but not Israel.

There had been widespread hopes that his trip to the region could increase the chances of a ceasefire deal, or the resumption of humanitarian aid to Gaza, which Israel has prevented for more than two months.

Speaking to reporters in Abu Dhabi on the final day of his trip, Trump said he was looking to resolve a range of global crises, including Gaza. “We’re looking at Gaza,” he said. “And we’ve got to get that taken care of. A lot of people are starving. A lot of people are — there’s a lot of bad things going on.”

In southern Gaza, Israel struck the outskirts of Deir al-Balah and the city of Khan Younis. It said it hit anti-tank missile posts and military structures.

In northern Gaza, the attacks sent people fleeing from the Jabaliya refugee camp and the town of Beit Lahiya. Israel said it eliminated several militants who were operating in an observation compound.

Dark smoke was seen rising over Jabaliya as people grabbed what they could of their belongings and fled on donkey carts, by car and foot.

“We got out of the house with difficulty, killing and death, we did not take anything,” said Feisal Al-Attar, who was displaced from Beit Lahiya.

There were no immediate reports of casualties after the strikes on Yemen. The Houthis’ satellite channel Al-Masirah acknowledged the attacks, but provided no other details.

Israel’s military said it had intercepted several missiles fired from Yemen toward Israeli airspace during Trump’s trip.

Israeli Prime Minister Benjamin Netanyahu vowed earlier in the week to push ahead with a promised escalation of force in Israel’s war in the Gaza Strip to pursue his aim of destroying the Hamas militant group, which governs Gaza.

In comments released by Netanyahu’s office Tuesday, the prime minister said Israeli forces were days away from entering Gaza “with great strength to complete the mission ... It means destroying Hamas.”

An Israeli official said the strikes on Friday were preparatory actions in the lead-up to a larger operation and to send a message to Hamas that it will begin soon if there isn’t an agreement to release the 58 hostages still in Gaza since Hamas' October 2023 attack that launched the war. The official was not authorized to brief media and spoke on condition of anonymity

The same official said that Cabinet members were meeting Friday to assess negotiations in Qatar, where ceasefire talks are taking place, and to decide on next steps.

Israeli government spokesman David Mencer told The Associated Press on Friday that Israel’s military is intensifying its operations as it has done since Hamas stopped releasing hostages. “Our objective is to get them home and get Hamas to relinquish power,” he said.

In Israel, families of hostages said they awoke Friday with “heavy hearts” to reports of increased attacks and called on Netanyahu to “join hands” with Trump’s efforts to release hostages.

Edan Alexander, the Israeli-American hostage released Monday after backdoor U.S.-Hamas diplomacy, left the hospital Friday, according to a statement released by his parents, who said his recovery was far from over.

“Missing this historic opportunity for a deal to bring the hostages home would be a resounding failure that will be remembered in infamy forever,” the families said in a statement released by the hostage forum, which supports them.

The war began on Oct. 7, 2023, when Hamas-led militants killed 1,200 people and abducted 251 others during an attack on southern Israel. Israel’s retaliatory offensive has killed more than 53,000 Palestinians, many of them women and children, according to Gaza’s Health Ministry, which does not say how many were combatants.

Almost 3,000 have been killed since Israel broke a ceasefire on March 18, the ministry said.

Of the hostages that remain in Gaza, Israel believes as many as 23 are still alive, although Israeli authorities have expressed concern for the status of three of those.

Dozens of Palestinians in Khan Younis lined up at a charity kitchen to obtain food Friday in a scene that quickly turned chaotic as the enclave entered its third month of Israel’s aid blockade.

Several children behind a metal partition screamed and cried out for food. At one point, the scene descended into chaos as charity kitchen workers struggled to push people back into line.

Some workers were attacked as the crowd surged forward, pressing against the partition and lunging toward the large pots of rice to grab whatever they could. One child used his hand to scoop the last bits of rice from the nearly empty pot, while holding his food container with the other hand.

Israel's blockade is preventing food, fuel medicine and all other supplies from entering, worsening a humanitarian crisis. Israel says the blockade aims to pressure Hamas to release the hostages it still holds.

“Our only hope was that Donald Trump’s visit to the Middle East would result in solutions and somehow open crossings to bring in humanitarian assistance as soon as possible into the Gaza Strip, but the visit is almost over and not a drop of water or bread entered Gaza,” said Saqer Jamal, a displaced man from Rafah who was at the kitchen.

Earlier this week, a new humanitarian organization that has U.S. backing to take over aid delivery said it expects to begin operations before the end of the month — after what it describes as key agreements from Israeli officials.

A statement from the group, called the Gaza Humanitarian Foundation, identified several U.S. military veterans, former humanitarian coordinators and security contractors that it said would lead the delivery effort.

Many in the humanitarian community, including the U.N., said the system does not align with humanitarian principles and won't be able to meet the needs of Palestinians in Gaza and won't participate it.

——

Mroue reported from Beirut. Associated Press writers Tia Goldenberg and Sam Mednick in Tel Aviv, Israel, contributed to this report.

——

Follow AP’s war coverage at https://apnews.com/hub/israel-hamas-war