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Bank of England raises rates but avoids bolder hike like Fed – The Zimbabwe Mail

Bank of England – © Getty Images / Travelpix Ltd


LONDON (AP) — The Bank of England raised its key interest rate Thursday by another half-percentage point to the highest level in 14 years, but despite facing inflation that outpaces other major economies, it avoided more aggressive hikes made by the U.S. Federal Reserve and other central banks.

It is the Bank of England’s seventh straight move to increase borrowing costs as rising food and energy prices fuel a cost-of-living crisis that is considered the worst in a generation. Despite facing a slumping currency, tight labor market and inflation near its highest level in four decades, officials held off on acting more boldly as they predicted a second consecutive drop in economic output this quarter, an informal definition of recession.

The bank matched its half-point increase last month — the biggest in 27 years — to bring its benchmark rate to 2.25%. The decision was delayed for a week as the United Kingdom mourned Queen Elizabeth II and comes after new Prime Minister Liz Truss’ government unveiled a massive relief package aimed at helping consumers and businesses cope with skyrocketing energy bills.

The new measures have eased uncertainty over energy costs and are “likely to limit significantly further increases” in consumer prices, the bank’s policymakers said. They expected inflation — now at 9.9% — to peak at 11% in October, lower than previously forecast.

“Nevertheless, energy bills will still go up and, combined with the indirect effects of higher energy costs, inflation is expected to remain above 10% over the following few months, before starting to fall back,” the monetary policy committee said.

The bank signaled it is prepared to respond more forcefully at its November meeting if needed. Its decision comes during a busy week for central bank action marked by much more aggressive moves to bring down soaring consumer prices.

The U.S. Federal Reserve hiked rates Wednesday by three-quarters of a point for the third consecutive time and forecast that more large increases were ahead. Also Thursday, the Swiss central bank enacted its biggest-ever hike to its key interest rate.

Three of the British bank’s nine committee members wanted a similar three-quarter-point raise but were outvoted by five who preferred a half-point and one who voted for a quarter-point.


The decision “suggests the Bank of England is concerned about the UK’s economic deteriorating outlook amid the looming threat of recession,” said Victoria Scholar, head of investment at interactive investor. “The timid increase will do little to stem the slide in sterling but may avoid inadvertently inducing unnecessary pain for the economy which is already grappling with slowing demand and deteriorating confidence.”

Surging inflation is a worry for central banks because it saps economic growth by eroding people’s purchasing power. Raising interest rates — the traditional tool to combat inflation — reduces demand and therefore prices by making it more expensive to borrow money for big purchases like cars and homes.

Inflation in the United Kingdom hit 9.9% in August, close to its highest level since 1982 and five times higher than the Bank of England’s 2% target. The British pound is at its weakest against the dollar in 37 years, contributing to imported inflation.

To ease the crunch, Truss’ government announced it would cap energy bills for households and businesses that have soared as Russia’s war in Ukraine drives up the price of natural gas needed for heating.

The Treasury is expected to publish a “mini-budget” Friday with more economic stimulus measures, and the bank said it won’t be able to assess how they will affect inflation until its November meeting..

The Bank of England expects gross domestic product to fall by 0.1% in the third quarter, below its August projection of 0.4% growth. That would be a second quarterly decline after official estimates showed output fell by 0.1% in the previous three-month period.

The weakness partly reflects a smaller-than-expected rebound after an extra June holiday to celebrate the queen’s 70 years on the throne and the impact of another public holiday Monday for her funeral, officials said.

The bank avoided pressure to go bigger even as other banks around the world take aggressive action against inflation fueled by the global economy’s recovery from the COVID-19 pandemic and then the war in Ukraine.

This month, Sweden’s central bank raised its key interest rate by a full percentage point, while the European Central Bank delivered its largest-ever rate increase with a three-quarter point hike for the 19 countries that use the euro currency.

But British policymakers signaled they will “respond forcefully, as necessary” if there are signs that inflationary pressure is more persistent than expected, “including from stronger demand.”

The bank said it’s also moving ahead with plans to trim its bond holdings built up under a stimulus program, selling off 80 billion pounds ($90 billion) worth of assets over the next year to bring its portfolio down to 758 billion pounds.


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British pound stabilizes, but turmoil still roils UK economy – New Zimbabwe.com

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By Associated Press


LONDON: The British pound stabilized Tuesday as U.K. authorities tried to ease investor concerns after the biggest tax cuts in 50 years sent the currency tumbling to a record low the previous day.

The turmoil is already having real-world effects, with several British mortgage lenders pulling offers from the market amid expectations the Bank of England will sharply boost interest rates to offset the inflationary impact of the pound’s recent slide.

It was trading at around $1.08 on Tuesday, after plunging as low as $1.0373 early Monday. The British currency is still down 4% since Friday, when Treasury chief Kwasi Kwarteng announced plans for 45 billion pounds ($49 billion) of unfunded tax cuts. The pound has fallen 20% against the dollar this year.

Kwarteng’s announcement, which comes at the same time the government plans to borrow billions to help shield homes and businesses from soaring energy prices, sparked concerns that the new government’s policies would swell government debt and further fuel inflation.

Late Monday, the central bank said it was “closely monitoring” financial markets and was prepared to boost interest rates “as much as needed” to curb inflation, which is already running at 9.9%, the highest among major economies. The bank’s Monetary Policy Committee isn’t scheduled to meet until Nov. 3.

“There is no rate increase today and speculators will enjoy the prospect of two months of Bank of England inactivity if the statement is taken at face value,” said Alastair George, chief investment strategist at Edison Group.

The U.K. Treasury also sought to reassure investors, saying it would set out a more detailed fiscal plan and independent analysis from the Office for Budget Responsibility on Nov. 23.

“We have responded in the immediate term with an expansionary fiscal stance on energy because we had to. With two exogenous shocks — Covid-19 and Ukraine — we had to intervene. Our 70-year-high tax burden was also unsustainable,″ Kwarteng said in talks with investors on Tuesday following the so-called “mini-budget″ last week.

“I’m confident that with our growth plan and the upcoming medium term fiscal plan — with close cooperation with the Bank — our approach will work,” he said.

That did little to quiet criticism of the government’s policies.

Lawrence Summers, who served as U.S. Treasury secretary under Bill Clinton, said he was surprised that the International Monetary Fund hadn’t spoken out because a currency crisis in Britain could have worldwide consequences and affect London’s viability as a global financial center.

“I was very pessimistic about the consequences of utterly irresponsible U.K. policy on Friday,” Summers tweeted Tuesday. “But, I did not expect markets to get so bad so fast.”

Kwarteng and Prime Minister Liz Truss, who replaced Boris Johnson as prime minister on Sept. 6, are betting that lower taxes and reduced bureaucracy eventually will generate enough additional revenue to pay for the tax cuts announced Friday.

But many economists say it is unlikely the gamble will pay off.

Torsten Bell, who heads the Resolution Foundation, a think tank focused on economic inequality, said the markets were looking at the government’s plans “and saying that is not what serious policymaking looks like.”

Market reaction to Friday’s announcement will hurt consumers by fueling inflation in the short term, leading to higher mortgage payments in the medium term, and boosting government borrowing in the long term, the foundation said Monday.

“The world we are heading for is a bumpy few weeks,” Bell told Sky News. Kwarteng “is now going to have quite a tough time because he has now set out plans to balance the books in November. That is going to be very hard.”

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Lifeline for locals seeking specialist medical services – Chronicle

The Chronicle

Leonard Ncube , Victoria Falls Reporter
ZIMBABWEANS seeking specialised healthcare outside the country especially in India could get a lifeline as a Botswana health institution Francistown Academic Hospital (FAH) is seeking partnerships with local health service providers for locals to get medical help in the neighbouring country.

Over the years, many Zimbabweans have been referred by doctors to India for specialist surgeries.

The common surgeries people travel to India for include open heart and liver surgery, cardio and vascular surgery, kidney transplant, neurosurgery, radiation surgeries and intestines laparoscopic among other services.

Some people have died after failing to raise money for transport, accommodation, food and surgery running into thousands of United States dollars.

Few that have been lucky have been assisted by well-wishers to raise the money.

Government is encouraging partnerships in the health sector while efforts are also being made to come up with a National Health Insurance towards a universal health service.

FAH is a subsidiary of Indus Healthcare in India, a one-stop medical facility with a variety of services, most of which are demanded by Zimbabweans.

FAH has partnered the Association of Health Funders Association of Zimbabwe (AHFoZ) in an effort to work with local health care service providers to improve access to health services for Zimbabweans.

The organisation attended the recent AHFoZ annual conference in Victoria Falls where Deputy Minister of Health and Child Care Dr John Mangwiro, who was representing Vice-President Dr Constantino Chiwenga as guest of honour, said such a partnership will be beneficial to Zimbabweans.

Acting President Constantino Chiwenga

“This is interesting and will reduce costs for our people who go out of the country to seek medical services especially in India,” said Dr Mangwiro during a tour of exhibition stands where FAH was exhibiting.

FAH business development and marketing manager Mr Nonofo Brian Molatlhegi said Zimbabweans will be able to use their medical aid if the organisations strike deals with local schemes.

“This is a subsidiary of Indus Group with six hospitals in India and we facilitate treatment or make payment terms for clients in Francistown instead of going to India.

“We offer a wide range of services where pre-operation procedures will be done in Francistown and if need be the patient will be airlifted to India but reviews and follow-up surgeries will be done in Francistown where patients get the same help they would have gotten if they were in India. This is a win-win situation as people will save on money and will be able to save life,” said Mr Molatlhegi.

The Government of Botswana is an equity partner in the hospital.

Mr Molatlhegi said instead of patients flying to India, FAH can also fly Indian doctors to Francistown.
Most people who travel for treatment in India are accompanied by a relative who will be taking care of them and that increases costs.

“This is what we are selling to Zimbabwean medical providers that clients should not go to India where they are unknown. When there are many clients we collect the cases and fly doctors to Francistown to do surgeries. The patients share the cost of flying a doctor and that will be cheaper than going there individually,” Mr Molatlhegi.

FAH was opened in 2020 and targets the Angola, Botswana, Zambia and Zimbabwe markets and Zambia before spreading to the whole continent.

AHFoZ is a member of Health Funders of Southern Africa and International Federation of Health Plans in UK as the health sector continues to strike partnerships. [email protected]

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Parly and ZELA draft laws to curb illicit financial flows – New Zimbabwe.com

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By Thobekile Khumalo


PARLIAMENT, in partnership with Zimbabwe Environmental Law Agency (ZELA), is working on crafting laws to curb illicit financial flows (IFF) manifested by loopholes in policies contributing to the crippled economy and underdevelopment in the country.

IFFs worsen poverty and are mainly exacerbated by the mining sector where gold is not submitted to Fidelity Gold Refineries but sold to the black market that offers a higher rate. This has necessitated the formalisation of small scale and artisanal miners as a way of preventing resource leakages.

In an interview with the vice chairperson of Africa Parliamentarians Against Illicit Financial Flows, Member of Parliament (MP) Vimbai Matevere said as law makers they should make sure they do not only enact legislation, but give solutions to problems.

“As Parliament we’re not only suppose to create laws but also be giving solutions so that we make our country go forward. So, here we are discussing about illicit financial flows because it cripples the economy.

“The moment that we have a lot of illicit financial flows going out of the country, we realise it reduces the amount that we’re supposed to have as a country.

“Our revenue collection then reduces from the intended ways that we want it to,” she said.

Matevere said they are working on certain laws that are able to curb illicit financial flows.

“We need to appreciate that there are certain sectors in the economy which include mining, tourism and agriculture which are the bases of National Development Strategy 1 (NDS1) and when we look at them we need to find out ways for them to become effective,” she said.

She added: “We are also talking about formalising gold mining, especially that is now small scale miners, it’s a matter of us having some cultural mindset which makes it important to understand why it is important to formalise the artisanal and small scale miners.

“We need to understand their contribution to economic development and we also need to appreciate that its also important for us to have a holistic approach so that we understand that it will go from generation to generation because we understand that land is an infinite resource and also the same with the mines and also the minerals that we have.

“We need to understand that we create mechanisms that make us be able to sustain our operations going forward as a country. So these are some of the objectives that also made us be able to get here.”

According to a 2013 African Development Bank report, Zimbabwe had lost a cumulative US$12 billion in the last three decades through lFFs, ranging from opaque financial deals to tax avoidance and illegal commercial activities.

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