Finance

Federal Reserve Chair Jerome Powell vowed in a “60 Minutes” interview aired Sunday that the central bank will proceed carefully with interest rate cuts this year.
“We just want some more confidence before we take that very important step of beginning to cut interest rates,” he said.
Powell warned that the monetary policy tightening would cause “some pain.” However, “it really hasn’t happened,” he added.

Federal Reserve Chair Jerome Powell holds a press conference following the release of the Fed’s interest rate policy decision at the Federal Reserve in Washington, U.S., January 31, 2024. 
Evelyn Hockstein | Reuters

Federal Reserve Chair Jerome Powell vowed in an interview aired Sunday that the central bank will proceed carefully with interest rate cuts this year and likely will move at a considerably slower pace than the market expects.
In a wide-ranging interview with “60 Minutes” after last week’s Federal Open Market Committee meeting, Powell expressed confidence in the economy, promised he wouldn’t be swayed by this year’s presidential election, and said the pain he feared from rate hikes never really materialized.

“With the economy strong like that, we feel like we can approach the question of when to begin to reduce interest rates carefully,” he told the news magazine’s Scott Pelley, according to a transcript CBS released.
“We want to see more evidence that inflation is moving sustainably down to 2%,” Powell added. “Our confidence is rising. We just want some more confidence before we take that very important step of beginning to cut interest rates.”
As he did during a Wednesday news conference, he said it’s unlikely the FOMC will make that first move in March, which futures markets had been anticipating.
The meeting concluded with the committee holding its benchmark borrowing rate in a range between 5.25%-5.5%. In its post-meeting statement, the committee said it would not be cutting “until it has gained greater confidence that inflation is moving” to the 2% target.
Markets have been making aggressive bets on how many cuts the Fed would make this year. Current pricing is pointing to five quarter-percentage points reductions, though Powell backed the FOMC’s December “dot plot” grid of individual members’ estimates that pointed to just three moves.

“We’ll update [the outlook] at the March meeting. I will say, though, nothing has happened in the meantime that would lead me to think that people would dramatically change their forecasts,” he said, noting that “the time is coming” for cuts but perhaps not yet.
Powell was broadly optimistic about the economy, noting that inflation, while still above the Fed’s target, has moderated while the jobs market is strong. Nonfarm payrolls accelerated by 353,000 in January, the Labor Department reported Friday. The biggest risk, he said, is likely from geopolitical events.
During the Fed’s annual retreat in Jackson Hole, Wyoming, in August 2022, in the early days of the rate-hike cycle, Powell warned that the policy tightening would cause “some pain.” However, that hasn’t been the case, he said in the “60 Minutes” interview.
“It really hasn’t happened. The economy has continued to grow strongly. Job creation has been high,” he said. “So really the kind of pain that I was worried about and so many others were, we haven’t had that. And that’s a really good thing. And, you know, we want that to continue.”
In another matter, Powell reiterated that neither he nor his colleagues would be swayed by political pressure during this presidential election year.
“We do not consider politics in our decisions. We never do. And we never will,” he said. More

Big Tech’s market dominance may push more investors to equal-weight exchange-traded funds, according to VettaFi’s Todd Rosenbluth.
“Investors are getting nervous that too much money is concentrated in a handful of stocks within the broader ETFs that they have available that [are] tied to the S&P 500 or even the Nasdaq 100,” the firm’s head of research told CNBC’s “ETF Edge” earlier this week.

Rosenbluth lists the Invesco S&P 500 Equal Weight ETF and the Invesco S&P 500 Equal Weight Technology ETF as options for investors who want to reduce exposure to the “Magnificent Seven.”
“You own the same companies that you’d find within the S&P 500 or in the technology sector. But instead of being dominated by Apple and Microsoft and Nvidia, you spread that risk around to the other companies,” Rosenbluth said. 
Ahead of this week’s earnings from five of the Magnificent Seven names, BNY Mellon’s Ben Slavin noted flows have been sluggish into the group so far this year. Meanwhile, he found “less-loved” market groups including financials and parts of real estate grabbing interest.
“In our conversations with advisors, [they’re] looking for somewhere else to go and are starting to get nervous based on [Big Tech] valuations,” the firm’s global head of ETFs said.
CNBC’s Magnificent 7 Index, which is comprised of Apple, Alphabet, Meta, Microsoft, Amazon, Nvidia and Tesla, soared almost 6% Friday. The index is up 68% over the past 52 weeks.
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A “death note” is more informal than wills and other estate planning documents, but perhaps just as important, said certified financial planner Doug Boneparth.
Its contents ease the burden on loved ones when you die.
The document might contain login information for financial and other household accounts, important points of contact, the location of physical items like home and car deeds, and one’s wishes for their online presence like social media.

Kathrin Ziegler | Digitalvision | Getty Images

“Sorry I am dead.”
This is how Doug Boneparth, a certified financial planner, starts what he calls a “death note” to his wife, Heather.

Such a document, he says, is distinct from other estate planning cornerstones like drafting a will, which lays out one’s wishes for how to distribute assets upon death. (Otherwise, state law decides for you.)
A death note is more informal — it isn’t necessarily legally binding — but no less important, said Boneparth, president and founder of Bone Fide Wealth, based in New York, and a member of CNBC’s Advisor Council.
Its contents aim to ease the administrative work assumed by loved ones when you die.
“This letter is more to help you take control at a time when everything feels out of control,” Boneparth writes in The Joint Account, a couples and money newsletter he pens with his wife. “It fills in gaps and provides immediate access to information that your estate planning documents typically don’t.”

What to include in your death note

A death note may break down all of a decedent’s financial accounts — savings, credit cards, investments and insurance, for example — along with associated account numbers and login information.

Likewise for accounts associated with regular household bills: a mortgage, utilities (such as electricity, water, gas, internet and phone), car insurance, gym memberships and streaming services, for example.

It may also include more under-the-radar information: important points of contact like one’s estate planning attorney, accountant, business contacts and close friends — anyone who may be instrumental in assisting loved ones during the first steps after your death, Boneparth said.
Those loved ones will likely also need access to your computer and phone if you die. Such a “digital dilemma” can be overcome by disclosing login info for devices and credentials for any sort of master password manager, he said.
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“When people are left behind, they’re already mourning and distraught,” said Winnie Sun, co-founder of Sun Group Wealth Partners, based in Irvine, California, and a member of CNBC’s Advisor Council. By drafting a note, “you give them time to grieve while making their lives a lot easier because everything is nicely organized.”
Otherwise, “it’s just mayhem,” she said.
Sun refers to this concept not as a death note, but as the assembly of one’s “financial first aid kit.” (She breaks down the relevant pieces of it here.)

Don’t forget social media accounts, physical items

One’s online presence is also an important element of a death note, the advisors said. For example, how would you like your social media accounts and professional websites managed after you die? Should they live on in perpetuity or be deleted?
When Sun’s father passed away, the family was able to access his social media accounts and download content like photos they wished to preserve.

“It’s not just about money; it’s about memories we wanted to keep,” Sun said.
Additionally, don’t forget the “more practical items” in your note: the location of spare keys to the house, car or safe, as well as any physical documents like life insurance policies, home deeds or car titles, Boneparth said.

Don’t keep it secret

Update your note once a year or when there’s a significant life change (opening a new bank account, buying property, getting a new loan, for example), the advisors recommended.
Importantly, don’t keep your note secret — tell your loved ones that you’ve drafted it and where to find it, they said.

It’s not just about money; it’s about memories we wanted to keep.

Winnie Sun
co-founder of Sun Group Wealth Partners

Boneparth printed out his note and keeps it in a safe at home. Others may wish to keep theirs in a bank safety deposit box, for example, and have a digital copy.
Ultimately, thinking about one’s wishes and giving clarity to those we leave behind after death “is an act of love — not fear,” he wrote.
Don’t miss these stories from CNBC PRO: More

A recent slump in sales and a falling share price have led to speculation that Superdry, which listed on the London Stock Exchange in March 2010, may become a takeover target.
The company confirmed in a market update on Friday that co-founder and CEO Julian Dunkerton had requested “permission to begin exploring the possibility of making an offer for the company.”

Tristan Fewings/Getty Images

LONDON — Superdry shares soared more than 100% on Friday, as the embattled British fashion retailer confirmed that co-founder and CEO Julian Dunkerton is considering taking it private.
The stock peaked at 48.55 pence (62 cents) per share shortly before 11 a.m. London time and was last trading at around 46 pence per share.

A recent slump in sales and a falling share price have led to speculation that Superdry, which listed on the London Stock Exchange in March 2010, may become a takeover target. The rumors intensified this week, when it emerged that Norwegian hedge fund First Seagull had built a 5.3% stake in the company, making it the second-largest shareholder behind Dunkerton, according to LSEG data.
The company confirmed in a market update Friday that Dunkerton had requested “permission to begin exploring the possibility of making an offer for the company,” and to begin talks with potential financial backers, which the business accepted.
“Julian Dunkerton has since confirmed to the Transaction Committee that he is engaged in discussions with potential financing partners (‘Potential Sponsors’) for the purposes of considering options in respect of the Company, which may include a possible cash offer for the entire issued and to be issued share capital of the Company, not already owned by him,” Superdry said.
“These discussions are at a preliminary stage and no decisions have been made.”
Dunkerton has until March 1 to submit an offer or walk away under the U.K. Takeover Panel’s regulations.

Stock chart icon

Superdry’s share price performance since its listing in March 2010.

Dunkerton co-founded Superdry as a market stall in Cheltenham, England, in 2003, before expanding to become one of the U.K.’s largest high street fashion retailers.
Superdry’s share price peaked above £20 per share in January 2018, shortly before Dunkerton left the business due to a disagreement over its commercial direction.
He returned to the helm on the back of a boardroom coup the following year, but the company’s share price has remained in general decline as the U.K.’s cost-of-living crisis hammered the retailer. The stock closed Thursday’s trade at just over 21 pence per share. More

Goldman Sachs’ investment in a Texas energy retailer means its reach into American homes is about to grow.
The idea that a Goldman-linked company aims to provide an essential service to Americans could invite scrutiny on the bank and also gets Goldman into an industry that critics say is a hotbed for consumer abuse.
Rhythm Energy calls itself the biggest independent green energy provider in Texas. It operates autonomously from the Goldman private equity fund that owns it, said a person with knowledge of the firm.

Omar Marques | Lightrocket | Getty Images

Goldman Sachs abandoned an ill-fated push into consumer banking in late 2022, but an investment in a Texas energy retailer means its reach into American homes is about to grow.
Rhythm Energy, a Houston-based electricity provider overseen and owned by a Goldman Sachs private equity fund, has won approval from federal authorities to expand from its home market into the more than dozen states where deregulated power firms operate, CNBC has learned.

That covers energy networks, mostly in the Northeast, that provide electricity for 190 million Americans, according to federal data.
The idea that a Goldman-linked company aims to make waves by providing an essential service to Americans could invite scrutiny on the bank and its efforts to grow revenue though so-called alternative investments. It also gets Goldman into an industry, albeit through an intermediary, that critics have called a hotbed of consumer abuse.

Bad actors

A wave of energy deregulation that began in the 1990s gave rise to a new group of retailers promising savings versus existing utilities. State attorneys general, consumer groups and industry watchdogs have alleged that some of these retailers use deceptive marketing and billing practices to saddle customers with higher costs. One estimate is that customers paid $19.2 billion more than they needed to in deregulated states over a decade.
Rhythm, which calls itself the biggest independent green energy provider in Texas, positions itself as an honest company in a field of less scrupulous players. The startup, which began offering retail energy plans to Texans in 2021, avoids the teaser rates and hidden fees of rivals, it has said.
“While some of our competitors like to charge up to 18 hidden fees, we’re proud to charge exactly 0,” Rhythm says on its website.

But Rhythm’s Texas customers paid an average rate of 18 cents per kilowatt hour in 2022, five cents per hour more than what customers of the state’s regulated providers paid, according to data from the U.S. Energy Information Administration.
That figure doesn’t include the impact of credits provided to solar customers, which reduces their costs, according to a person with knowledge of the company who wasn’t authorized to speak on the record.

Source: Rythym

Although there have been “bad actors” in the residential power field, there have also been “great retailers with innovative products,” James Bride, an energy consultant, said in an interview. “Realizing the potential there depends on ethical company behavior.”
Nothing found in online reviews, interviews with current and former customers and conversations with watchdogs contradicts Rhythm’s claims of fair dealings and good service.
“Goldman Sachs invests in numerous industries across our private funds on behalf of clients,” a spokeswoman for the New York-based bank said in response to this article. “Many of those companies operate businesses that serve retail customers. This is not new.”

Goldman’s growth engine

Goldman’s record of dealings with the American consumer is checkered: The bank was accused of profiting off the 2008 housing bubble by betting against subprime securities. Years later, the bank named its consumer effort Marcus in part to distance itself from that memory. But the consumer division was dragged down by ballooning losses, a talent exodus and unwanted regulatory attention.
Goldman CEO David Solomon has now hitched his fortunes to the bank’s asset management division, calling it the “growth engine” after the retail banking bust. As part of that effort, Goldman aims to raise more client money for private equity funds to help his goal of generating $10 billion in fees this year.
Private equity firms have transformed the energy landscape in the nation’s largest power markets. For instance, in the PJM zone including Pennsylvania, New Jersey and Maryland, private capital owns about 60% of the fossil fuel generators and enjoy less regulatory oversight than legacy utilities, according to an August report from the Institute for Energy Economics and Financial Analysis.
“Ownership status is important,” the report’s author Dennis Wamsted wrote. “Utilities are overseen by state regulators who have a vested interest in keeping costs for ratepayers in check; private capital is largely free from that oversight.”
Rhythm, which buys energy on wholesale markets and sells it to consumers, first appeared in headlines in November, after its application to the Federal Energy Regulatory Commission surfaced.
The move made Goldman Sachs, via its private equity arm, one of the first Wall Street firms involved in selling retail energy contracts to households, according to Tyson Slocum, energy and climate director of consumer watchdog Public Citizen.

Possible conflict?

Slocum noted that Goldman’s trading arm deals in energy contracts and owns, along with other creditors, a fleet of fossil fuel generators along the Northeast corridor, while a separate division formed a solar power firm named MN8 Energy. The possibility of influence over retail sales, energy generation and trading in power contracts could lead to abuses, he said.
“Goldman knows how to execute, they own and operate energy assets and they’re involved in the futures and physical market,” Slocum said. “They’ll be able to manage this well. Will the customers do as well? I’m not convinced.”
Goldman has “strict information barriers between its public and private businesses” that prevent such self-dealing, the company spokeswoman said.
In a statement provided to CNBC, Rhythm CEO P.J. Popovic said his firm “has never purchased power from Goldman Sachs or any Goldman Sachs owned or affiliated power generation asset, nor has Rhythm ever purchased physical or financial power from Goldman Sachs or any of its affiliates in the commodity markets.”
Rhythm operates “autonomously” from West Street Capital Partners, the Goldman Sachs private equity fund that is listed in federal filings as an owner, according to the person who wasn’t authorized to speak on the record for the company.
Still, Goldman Sachs has been involved with Rhythm since the year it was founded in 2020, and the bank has placed at least one director on Rhythm’s board, a typical arrangement in the private equity industry, according to this person.
Private equity funds can exert influence on portfolio companies in a number of ways, including by hiring and firing of CEOs and signing off on acquisitions and company sales, according to Columbia Business School finance professor Michael Ewens.
But the main focus of Goldman Sachs managers — ensuring a profitable result for investors of West Street Capital Partners and boosting the odds they will participate in future rounds — should instill discipline in its stewardship of companies, Ewens added.
“People tend to think a lot of bad things about private equity, but Goldman is always going to have one overriding concern,” Ewens said. “Will somebody buy this company for more than they paid for it five years from now?” More

Financial sextortion is a crime whereby predators trick minors into sending sexually explicit photos and videos, and then blackmail them for payment.
Such incidents, largely perpetrated by crime rings in West Africa, are on the rise in the U.S.
There are steps parents can take to protect their kids.

Cavan Images | Cavan | Getty Images

“Financial sextortion,” a type of cybercrime that targets teens and tweens, is on the rise.
Reports of financially motivated sextortion involving minors increased at least 20% from October 2022 to March 2023 relative to the same six-month period the prior year, the FBI said in January. 

“Sextortion is a rapidly escalating threat,” FBI Director Christopher Wray told the Senate Judiciary Committee in December. “There have been way too many teenagers victimized and they don’t know where to turn.”
Criminals coerce kids — typically males ages 14 to 17 — into creating and sending sexually explicit material such as photos and videos, often by pretending to be “alluring young girls,” the FBI said.
Predators then blackmail victims, threatening to release that content to friends, family and social media followers unless they receive payment, perhaps in the form of money or gift cards. Even if paid, scammers often demand more and escalate threats, the FBI said.
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The damage isn’t just financial: Some victims, feeling embarrassed, afraid and isolated, have turned to self-harm and suicide, the agency said.

Financial sextortion is the fastest-growing crime targeting children in North America and Australia, according to the Network Contagion Research Institute. Incidents in those regions are up 1,000% in the past 18 months, it said.
Data is almost certainly understated since it relies on reported incidents, experts said.

Criminals largely target kids on social media

Jub Rubjob | Moment | Getty Images

In the past, predators had largely used sextortion for their “sexual gratification and control” but are now mostly motivated by greed, the FBI said.
Nearly all activity is linked to a West African cybercriminal gang, the Yahoo Boys, who primarily target English-speaking minors and young adults on social media platforms such as Instagram, Snapchat and Wizz, according to the NCRI.
“This disturbing growth in child sexual exploitation is driven by one thing: changes in technology,” Sen. Dick Durbin, D-Ill., and chair of the Senate Judiciary Committee said Wednesday at a hearing with leaders of social media companies including Meta, Snap, TikTok, Discord and X.
To that point, 65% of Generation Z across six countries, including the U.S., said they or their friends had been targeted in online sextortion schemes, according to recent research by Snap.
In such cases, predators obtained sensitive material via “catfishing” — persuading victims to send photos by pretending to be someone they’re not — or “hacking” — gaining unauthorized access to electronic devices or social media accounts to steal images — Snap said.

Wealthy households may be more at risk

Kids from affluent households — those with annual income of $150,000 or more — are most likely to be victims of cyber extortion and cyberbullying, according to a recent paper by Javelin Strategy & Research, a consulting firm.
For example, 37% of higher-earning households have kids who’ve been extorted, compared with just 5% of those making less than $50,000 a year and 10% of those making $50,000 to $100,000, Javelin found.
Wealthy parents are more likely to be lenient about social media use. They more often believe tweens should have their own accounts, meaning children have accounts in their own names and with their own images, while using their own credentials to log in and manage them, according to the Javelin report.

Further, kids from high-income homes may be more visible to predators because of increased access to paid online accounts, such as those for online gaming and streaming services, the report also said.
Criminals also understand they’re more likely to get a bigger payout from wealthier individuals, said Tracy Kitten, director of fraud and security at Javelin. They may also have more digital devices such as smartphones and gaming systems, and a larger digital footprint, she said.
More broadly, there was an uptick during the Covid-19 pandemic of kids having access to their parents’ financial accounts, perhaps to pay for home food deliveries, for example, giving them an outlet to pay predators, Kitten said.
Teens may also have peer-to-peer payment apps such as Venmo or Cash App, or have access to a bank debit card, for example, she added.

This disturbing growth in child sexual exploitation is driven by one thing: changes in technology.

Sen. Dick Durbin
D-Ill., chair of the Senate Judiciary Committee

It’s unclear how much the average sextortion victim loses or how much victims have lost in aggregate. An FBI spokesperson didn’t respond to CNBC’s request for comment.
However, one recent example suggests big profits for criminals. In November, the U.S. indicted a Nigerian national, Olamide Oladosu Shanu, and four co-conspirators in the “largest known financial sextortion operation to date,” alleging Shanu’s enterprise received more than $2.5 million in bitcoin from victim payments, according to the NCRI report.
Crime rings are distributing instructional videos and scripts about the frauds on TikTok, YouTube and Scribd, fueling an uptick in sextortion, the NCRI said.

How to protect your kids from sextortion

There are steps parents can take to protect their children from financial sextortion, according to privacy experts and law enforcement officials:
Don’t assume your child is safe. The FBI has interviewed victims as young as 8 years old, and across all ethnic and socioeconomic groups, the agency said. “The victims are honor-roll students, the children of teachers, student athletes, etc.,” the agency said. “The only common trait is internet access.”
Know that social media, gaming and other digital platforms pose risks. Sextortion can start on any site, app, messaging platform or game where people meet and communicate, according to the FBI.
“Parents should closely monitor their child’s phone/online use and be very cognizant of whom they are communicating, or gaming with no matter the platform their child is using to gain online access,” Chris Hill, an NCRI board member and chairman of the Police Athletic League, a nonprofit youth development group, wrote in an email.
Review internet and social media use, settings. Caregivers can put limits on internet use or spot check apps and communication on digital devices, the FBI said. They can also consider rules against using devices in bedrooms or take steps such as shutting off internet access at night. Checking security settings on social media and keeping accounts private, instead of public, can also reduce risk.
Communicate. Open lines of communication and information-sharing between parents and children are the “best defense,” the FBI said. Children need to know such crimes are happening, the agency said. Explain that any photo or video has the potential to become public. Crucially, let kids know they always can come to you for help. The FBI has additional tips for caregivers to talk to children about sextortion.
“Parents should have a conversation with their child/children to let them know that there is nothing they can’t come to them with, and that they are open for tough or uncomfortable conversations at any time,” Hill wrote.
Invest in identity protection services for the whole family. Such digital services, such as NortonLifeLock, Aura and Identity Guard, generally monitor activity on social media and the dark web, looking for instances of a child’s personal information or likeness being compromised, for example, Kitten said.
Sign up for alerts about a child’s transactions from financial accounts or peer-to-peer services for signs of suspicious activity, Kitten said.
Be on the lookout for behavior, such as withdrawal or depression, that’s out of the ordinary, Kitten said.
Be conscious of your own habits. Parents’ social media behavior — for example, oversharing and making too much personal information public — can “set poor examples” for kids, Javelin wrote. Public posts that openly share about vacations, school field trips and birthdays, for example, also create road maps for cybercriminals, the Javelin report said.
Contact law enforcement immediately upon learning of any unwanted inappropriate contact, Hill said. Parents can call 1-800-CALL-FBI or visit tips.fbi.gov to report incidents. If sexually explicit images have been shared, visit the National Center for Missing and Exploited Children’s Take it Down tool or Is Your Content Out There? for potential removal, the FBI said.
Correction: This story has been updated to reflect comments attributable to Chris Hill, an NCRI board member and chairman of the Police Athletic League, a nonprofit youth development group.Don’t miss these stories from CNBC PRO: More

Long-term yields might be the best bond investment this year, according to one exchange-traded fund expert.
“The iShares 20-year Treasury ETF (TLT) will get the biggest bang for its buck [and] some of the intermediate-term products like the Vanguard Intermediate-Term Corp Bond (VCIT) will get some bang for the buck,” VettaFi’s Todd Rosenbluth told CNBC’s “ETF Edge” on Monday.

Rosenbluth added that while the short-term products were very popular last year, they will “largely tread water or earn a little more than their overall income.”
The firm’s head of research reasons that if the Federal Reserve cuts interest rates more than expected then investors should stay in longer-term products to benefit.
In the same interview, BNY Mellon’s Benjamin Slavin noted that while flows moved into ultra-short or short-term government ETFs and money market funds in 2023, the story changed toward the end of the year.
“We saw a lot of money start to move out of the short end of the curve into intermediate duration,” said Slavin, the company’s global head of ETFs.
“You started to see that picture start to emerge where advisors are looking and retail investors are looking to capture or lock in those higher yields, and also potentially get some capital appreciation as rates back up,” he added.
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Inflation is projected to fall temporarily to the Bank’s 2% target in the second quarter of this year before rising again in the third and fourth, due to the varying contribution of energy prices to annual comparisons.
Headline inflation is not expected to return to target again until late 2026, the Bank’s newest Monetary Policy Report projected.

A passageway near the Bank of England (BOE) in the City of London, U.K., on Thursday, March 18, 2021.
Hollie Adams | Bloomberg | Getty Images

LONDON — The Bank of England held interest rates steady at 5.25% on Thursday, with the announcement detailing the very divided opinions among board members.
The Monetary Policy Committee voted 6-3 in favor of holding rates, with two dissenters favoring a further 25 basis point hike and one voting for a quarter-point cut. This marked the first meeting since August 2008 that MPC members have voted to move interest rates in opposite directions at the same meeting.

“The MPC remains prepared to adjust monetary policy as warranted by economic data to return inflation to the 2% target sustainably,” the Bank said in statement.
“It will therefore continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole, including a range of measures of the underlying tightness of labour market conditions, wage growth and services price inflation. On that basis, the Committee will keep under review for how long Bank Rate should be maintained at its current level.”
Sterling recouped the day’s losses against the dollar to trade roughly flat by early afternoon in London, at around $1.2677 to the pound.
Much of the market focus of late has been on when the central bank will start cutting interest rates from their current 15-year high.

U.K. headline inflation unexpectedly nudged upward to an annual 4% in December on the back of a rise in alcohol and tobacco prices, while the closely watched core CPI figure was unchanged at 5.1%.

However, it has remained on a general downward trajectory, while the Bank’s key indicators of the labor market, wage growth and services inflation have all shown signs of easing.
The MPC notably dropped its prior warning that “further tightening” would be necessary if indications emerged of more persistent inflationary pressures, but stopped short of openly signaling that rate cuts were coming into view.
Inflation is projected to fall temporarily to the Bank’s 2% target in the second quarter of this year before rising again in the third and fourth, due to the varying contribution of energy prices to annual comparisons.
Headline inflation is not expected to return to target again until late 2026, the Bank’s newest Monetary Policy Report projected.
“Bank staff estimate that around two-thirds of the peak domestic impact of higher interest rates on the level of GDP has now come through, and that percentage is up from about half in November,” Governor Andrew Bailey said in Thursday’s press conference.
“The second key judgment is that excess demand is turning into excess supply. While we expect potential supply growth to remain subdued, a modest pickup in productivity and labor supply growth is sufficient for supply to outpace demand over the forecast period.”
Bailey added that the second round effects of domestic price and wage increases will take longer to unwind than they did to emerge, explaining why inflation is projected above the 2% target in the Bank’s baseline projection despite the emergence of excess supply.
Rate cuts ‘sooner rather than later’
With the journey to sustainable 2% inflation not expected to be smooth, policymakers will be keen to avoid jumping the gun and cutting rates too early, suggested Lindsay James, investment strategist at Quilter Investors.
“Given the fragile nature of this economic environment, and the geopolitical risks playing out, Andrew Bailey and co will take a cautious approach rather than risk another inflation spike,” James said.
“What is likely to switch the conversation on rate cuts is if the 2% target is hit sooner than thought. However, we are beginning to see signs that the BoE may move soon as there was a vote at today’s meeting for a cut.”
Though the MPC will be keen to mirror the “data dependent” approach of its transatlantic peers at the Federal Reserve, James argued that rate cuts will need to be introduced “sooner rather than later.”
“The U.K. economy is in somewhat of a malaise, and rates at this level for too long may end up being overly constrictive,” she said.
“It remains to be seen if a recession can be dodged, and even despite the improving backdrop, failure for economic growth to materialise may just spark the BoE into action.”
However, given that eight of the MPC’s nine members still advocated for rates to remain at the current or even higher levels, a serious conversation about loosening policy might still be a long way off, argued Raj Badiani, principal economist at S&P Global.
“We expect four interest rate cuts this year with the first to occur in June. However, the exact timing remains uncertain because of still strong service and core inflation and unsustainable earnings growth,” Badiani said in an email.
“Very restrictive monetary policy condemns the economy to near-flat activity in the coming quarters. Millions of U.K. households face a further spin of their cost of living tensions, namely escalating housing costs, rising personal taxation and historical high food and energy prices.” More