00:00Let's speak now to Liam Daly, a senior economist at the Centre for Economics and Business Research.
00:05Liam, thanks for your time. Do you think this decision by the ECB, the Bank of England,
00:08not to increase interest rates despite rising inflation is the wisest one?
00:14Yes, I think the decision is today both by the Bank of England and the European Central Bank
00:19is very much in line with expectations with both banks dealing with the conflicting challenges
00:24of rising inflation and sluggish growth in both areas.
00:29There's significant uncertainty that's been caused by the war alongside surging energy prices.
00:35And so at this point, as Governor Bailey said, we're no longer talking about interest rate cuts,
00:41but more of an active hold and the door now opening to potential rate rises later in the year.
00:46I mean, really, what are the prospects for growth?
00:48We've just heard from Legio Noir that there are all these scenarios that they're planning for,
00:52which points to the fact that it is such uncertain times.
00:57It is indeed. I think in both cases, growth prospects, both in the Eurozone and in the UK, are subdued.
01:03At CBR, we're expecting UK growth of 0.8% this year and not much better at 0.9%
01:10in the Eurozone.
01:11So given that businesses are going to be responding to a slower path of monetary easing,
01:16we do expect growth to be subdued.
01:18Brent crude oil reached a record high earlier of $126 a barrel.
01:23Yes, it's pulled back, but it's still really high.
01:25If prices stay high for long, how long do central banks really have
01:30before they absolutely have to act to control inflation?
01:34Well, they'll be keeping a very close eye on the secondary effects as they emerge in the coming months.
01:39However, clearly, they don't have a long, long time to make a decision on this.
01:47That said, we've seen a higher amount of volatility happening in the Middle East,
01:51so things can change very quickly.
01:54What's your best advice for consumers?
01:59It's a challenging time for consumers.
02:01I think the rising energy prices are obviously being felt,
02:04not least at the petrol pump, but in a number of other areas.
02:06And compounded to that is the fact that labour markets are softening.
02:11So this is a time when governments probably will be taking action
02:14to try and shield consumers from these rising costs.
Comments