The Bank of England held its regular meeting to discuss interest rates last Thursday.
They voted to hold interest rates at 4.5% as had been widely expected prior to the meeting.
The Bank targets an inflation rate of 2% and has already predicted that inflation will rise this year before dropping at the end of the year. However, inflation for the 12 months to January 2025 increased to 3.0% from 2.5% in December, a much higher and faster increase in inflation than had been expected.
The Bank have been taking a cautious approach to reducing the rate, and more cuts are expected during 2025. However, with the increases in the amount of national insurance paid by employers and national minimum wage rates taking effect in April, the Bank is having to tread a fine line between slowing price rises and risking damaging the economy by having rates too high.
Unregulated Buy Now Pay Later (BNPL) agreements will fall under full FCA regulation from 15 July 2026. For the first time, BNPL lenders will need to meet the same expectations as other consumer-credit providers. With almost 11 million UK adults using BNPL in 2024, according to an FCA survey, this is a significant change.
The government has published the draft secondary legislation for the UK’s Carbon Border Adjustment Mechanism (CBAM), which is due to go live on 1 January 2027. This is an important development for UK businesses importing affected materials.