US, UK and New Zealand Hold Rates Since 2023 as Energy Shock Lifts Inflation Risks
Updated
Updated · ABC News · May 18
US, UK and New Zealand Hold Rates Since 2023 as Energy Shock Lifts Inflation Risks
2 articles · Updated · ABC News · May 18
Australia’s May 5 rate increase to 4.35% has sharpened the contrast with the US, UK and New Zealand, which have not raised rates since 2023 despite mounting pressure from higher energy costs.
Different domestic conditions explain the pause: New Zealand’s rate is 2.25% amid weaker growth and higher unemployment, the UK held at 3.75%, and the Fed kept its 3.5%-3.75% band unchanged.
Inflation is still running above target in all three economies—New Zealand could top 4% in the June quarter, UK inflation is 3.3%, and the Fed’s preferred measure hit 3.5% through March.
Markets and economists now see tightening risks rather than relief, with New Zealand tipped to start raising in July, UK lenders already lifting mortgage rates ahead of a possible June BOE move, and the Fed seen as more likely to hike than cut.
Japan and Indonesia show the wider split in global policy: Japan’s rate is only 0.75% as it weighs yen weakness against growth risks, while Indonesia holds at 4.75% to support growth and defend the rupiah.
With UK inflation climbing, is the Bank of England’s cautious stance on interest rates a wise strategy or a costly delay?
Amidst a Middle East crisis and internal dissent, what specific economic signal is the Bank of England waiting for before it acts?