Central Banks in Australia and UK Maintain Interest Rates Amid Economic Uncertainty

The Bank of England (BoE) has decided to keep its main interest rate unchanged at 5.25% ahead of the upcoming UK election, despite some policymakers considering a rate cut due to balanced economic conditions. Meanwhile, the Reserve Bank of Australia (RBA) also held its interest rate at a 12-year high of 4.35%, expressing concerns over persistent inflation and maintaining a cautious stance on future rate hikes, with markets now pricing a 20% chance of an increase at the next meeting. RBA Governor Michele Bullock highlighted the uncertainties in the economic outlook, particularly regarding household spending and global economic conditions, and emphasized that inflation remains above the target range. Despite falling inflation from its peak in 2022, the RBA continues to focus on bringing it down to the 2-3% target range, while noting the impact of government spending and energy rebates on demand and inflation. The BoE and RBA's decisions reflect a cautious approach amidst global economic uncertainties and varying inflationary pressures.