Bank of England holds interest rates steady, and other economics stories to read this week

The Bank of England (BoE) has held its main interest rate at 5.25% – a 16-year high. The decision came at its last meeting before the UK's general election on 4 July.

The Bank's governor, Andrew Baily, pointed to positive news that inflation had returned to its 2% target, but said it was too soon to cut rates.

"We need to be sure that inflation will stay low and that's why we've decided to hold rates at 5.25% for now," he said.

As previous energy price-falls drop out of annual inflation data, the BoE expected inflation to return to above target, and repeated a May forecast for inflation to be around 2.5% in the second half of this year.

On the same day, the Swiss Central Bank cut interest rates for a second time this year.

The Congressional Budget Office (CBO) has said that the US budget deficit will reach $1.915 trillion in the 2024 fiscal period, exceeding 2023's $1.695 trillion and the largest outside of the COVID-19 pandemic.

The increase is mostly down to student loan relief, Medicaid healthcare, higher Federal Deposit Insurance Corp costs related to bank failures, and aid to Ukraine and Israel, Reuters reports. Deficits had previously fallen significantly in 2022 as a result of reduced COVID-19 spending.

The CBO predicts the deficit will climb further in the next fiscal year, to $1.938 trillion.

UK inflation has returned to its 2% target for the first time in nearly three years.

Australia's central bank has kept interest rates steady, but considered an option to increase rates in the face of upside risks to inflation.

In China, May's prices on new homes fell at the fastest pace in nearly 10 years, marking the 11th consecutive month of decreases.

China has kept its benchmark lending rates the same at a monthly meeting on 20 June.

Core inflation in Japan rose in May, as a result of energy levies, but an index that excludes the effect of fuel slowed for a ninth month in a row.

The value of Japanese exports increased in May as a result of the weak yen, but the volume of sales continued to drop for the fourth straight month.

Core machinery orders in Japan fell in April for the first time in three months, according to government data.

US retail sales saw only a modest rise in May and the previous month was revised down, suggesting that economic activity remained sluggish in the second quarter.

German federal and regional tax revenues rose 2.6% in May compared to the previous year.

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