Ben Stark

The Bank of England kept its central interest rate at 3.75%, with six Monetary Policy Committee members supporting the decision and three favouring an increase. The bank said inflation had fallen more than expected but warned that higher energy prices linked to the Iran-US conflict could push inflation up again later in the year. The unchanged rate is expected to keep borrowing and savings costs broadly stable for now, while persistent oil-price increases could force UK and US policymakers to consider higher rates. The US Federal Reserve also held rates steady, although uncertainty has increased over the timing of its next move.

Andy Burnham’s first week as UK prime minister included plans to remove VAT from household electricity bills for six months, cap bus fares at £2 and cut business rates for pubs, clubs and live-music venues. The measures could reduce household and business costs, but the government faces questions over funding, particularly because the electricity VAT cut could cost about £850 million. A frozen personal tax allowance is expected to remain unchanged for now, while the government says it will retain Labour’s fiscal rules and avoid raising income tax. With the autumn Budget approaching and limited time for the Office for Budget Responsibility’s review, investors and households will be watching how ministers balance tax cuts, spending and borrowing.