Are interest rates on the way up again? — SkimNews
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- The European Central Bank raised interest rates to 2.5%, citing the Middle East conflict and warning inflation was "set to remain well above" its 2% target for some time.
- The Federal Reserve, which has held rates steady between 3.5% and 3.75% for five consecutive meetings, is now widely expected to hike, with Deutsche Bank economists calling a rate increase "the most likely policy outcome."
- Fed Chair Kevin Warsh has repeatedly stressed the central bank's focus should be on slowing price rises—fueling hike expectations—though Oxford Economics' Grace Zwemmer still expects rates unchanged.
- Brent crude has climbed to around $105 per barrel—near conflict-outbreak highs—after shipments through the Strait of Hormuz were restricted by the Iran war, pushing UK gas prices above 200p per therm for the first time since late 2022.
- The Bank of England is expected to hold rates at 3.75% despite UK inflation at 2.9% and energy bills heading for a three-year high, because there are no signs of second-round wage-price effects thanks to a weak labor market.
- Trump is publicly pressuring for rate cuts, posting that the "Fed Board, with its great new leader, must get smart — BE PATRIOTS for a change," even as he says oil prices won't fall until the Iran war ends after November elections.
Why it matters: With Brent crude near $105 and central banks either hiking or holding rates, consumers worldwide face higher mortgage and credit-card costs layered onto surging energy bills. UK households specifically are set for their highest energy bills in three years heading into winter, even as the BoE stands pat—a hold driven by a stagnating labor market rather than price stability.
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