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

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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.

Thousands of nurses go on strike at several major New York City hospitals

NEW YORK (AP) — Thousands of nurses in three hospital systems in New York City went on strike Monday after negotiations through the weekend failed to yield breakthroughs in their contract disputes.

The strike was taking place at The Mount Sinai Hospital and two of its satellite campuses, with picket lines forming. The other affected hospitals are NewYork-Presbyterian and Montefiore Medical Center in the Bronx.

About 15,000 nurses are involved in the strike, according to New York State Nurses Association.

“After months of bargaining, management refused to make meaningful progress on core issues that nurses have been fighting for: safe staffing for patients, healthcare benefits for nurses, and workplace violence protections,” the union said in a statement issued Monday. “Management at the richest hospitals in New York City are threatening to discontinue or radically cut nurses’ health benefits.”

The strike, which comes during a severe flu season, could potentially force the hospitals to transfer patients, cancel procedures or divert ambulances. It could also put a strain on city hospitals not involved in the contract dispute, as patients avoid the medical centers hit by the strike.

The hospitals involved have been hiring temporary nurses to try and fill the labor gap during the walkout, and said in a statement during negotiations that they would “do whatever is necessary to minimize disruptions.” Montefiore posted a message assuring patients that appointments would be kept.

“NYSNA’s leaders continue to double down on their $3.6 billion in reckless demands, including nearly 40% wage increases, and their troubling proposals like demanding that a nurse not be terminated if found to be compromised by drugs or alcohol while on the job," Montefiore spokesperson Joe Solmonese said Monday after the strike had started. "We remain resolute in our commitment to providing safe and seamless care, regardless of how long the strike may last.”

New York-Presbyterian accused the union of staging a strike to “create disruption,” but said in a statement that it has taken steps to ensure patients receive the care they need.

"We’re ready to keep negotiating a fair and reasonable contract that reflects our respect for our nurses and the critical role they play, and also recognizes the challenging realities of today’s healthcare environment,” the statement said.

The work stoppage is occurring at multiple hospitals simultaneously, but each medical center is negotiating with the union independently. Several other hospitals across the city and in its suburbs reached deals in recent days to avert a possible strike.

The nurses’ demands vary by hospital, but the major issues include staffing levels and workplace safety. The union says hospitals have given nurses unmanageable workloads.

Nurses also want better security measures in the workplace, citing incidents like a an incident last week, when a man with a sharp object barricaded himself in a Brooklyn hospital room and was then killed by police.

The union also wants limitations on hospitals’ use of artificial intelligence.

The nonprofit hospitals involved in the negotiations say they’ve been working to improve staffing levels, but say the union’s demands overall are too costly.

Nurses voted to authorize the strike last month.

Both New York Gov. Kathy Hochul and Mayor Zohran Mamdani had expressed concern about the possibility of the strike. As the strike deadline neared, Mamdani urged both sides to keep negotiating and reach a deal that “both honors our nurses and keeps our hospitals open.”

“Our nurses kept this city alive through its hardest moments. Their value is not negotiable,” Mamdani said.

State Attorney General Letitia James voiced similar support, saying "nurses put their lives on the line every day to keep New Yorkers healthy. They should never be forced to choose between their own safety, their patients’ well-being, and a fair contract.”

The last major nursing strike in the city was only three years ago, in 2023. That work stoppage, at Mount Sinai and Montefiore, was short, lasting three days. It resulted in a deal raising pay 19% over three years at those hospitals.

It also led to promised staffing improvements, though the union and hospitals now disagree about how much progress has been made, or whether the hospitals are retreating from staffing guarantees.