As widely anticipated, the Bank of England (BoE) did not yield to pressure to cut interest rates, even though the inflation rate in the UK slowed to 3.2 per cent in March.

At the monetary policy meeting held on Thursday, the BoE held Britain’s interest rates steady for the sixth meeting in a row at 5.25 per cent, their highest level in 16 years.

However, the nine members on the Monetary Policy Committee (MPC) were split, with seven voting to hold rates unchanged while two opting to cut to five per cent. BoE governor Andrew Bailey voted with the majority to keep policy unchanged as he opened the door to a downward move as soon as the June MPC meeting, citing “encouraging news” on inflation, but that the BoE was not yet ready to act.

Separately, eurozone retail sales volumes rebounded in March, underpinned by higher sales of food and auto fuels, data from Eurostat showed on Tuesday.

According to the report, the volume of retail sales in the eurozone rose by 0.8 per cent in March compared to the prior month, the highest monthly rise since September 2022. This growth was propelled by a two per cent rise in sales volumes for automotive fuels and a 1.2 per cent uptick for food, drinks, and tobacco items.

Compared to the same period last year, retail sales volume within the currency bloc rose by 0.7 per cent in March. Among the member states with available data, Poland, Cyprus, and Hungary were the countries with the highest monthly increases in sales volume at 7.3 per cent, 4.8 per cent, and two per cent respectively. On the other hand, Sweden, Malta, and Austria saw the steepest declines at 1.8 per cent, one per cent, and 0.8 per cent respectively.

Finally, the rates charged for 30-year home loans in the US fell for the first time since late March, providing a boost to applications for home purchases and refinancing.

The contract rate on a 30-year fixed mortgage fell by 11 basis points in the week ended May 3 to 7.18 per cent, a report published by the Mortgage Bankers Association (MBA) showed on Wednesday. This is the first fall in the mortgage rate on the heels of four consecutive weeks of increases that took home borrowing costs well above seven per cent. Last week’s drop helped spur demand for home loans, as mortgage application volume saw an uptick of 2.6 per cent, according to data from the MBA.

This article does not constitute legal and/or financial advice and is being issued for information purposes only by Bank of Valletta plc, 58, Zachary Street, Valletta. Bank of Valletta is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap. 370 of the Laws of Malta).

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