Bank Rate maintained at 4.5% - March 2025
The Bank of England’s Monetary Policy Committee is responsible for making decisions about Bank Rate.
Financial institutions
Liquidity conditions and monetary policy operations from 23 October 2024 to 4 February 2025
This box describes the Eurosystem liquidity conditions and monetary policy operations in the seventh and eighth reserve maintenance periods of 2024, from 23 October 2024 to 4 February 2025.
Insights from banks and firms on euro area credit conditions: a comparison based on ECB surveys
This box examines euro area credit conditions from the perspective of banks and firms. The analysis uses data from the bank lending survey and the survey on the access to finance of enterprises. By offering qualitative insights into credit supply and demand, these surveys complement hard data in analysing how monetary policy is transmitted to firms through banks. The respective survey findings confirm that the general economic outlook and firm-specific conditions are significant factors affecting credit standards and the availability of bank loans.
Understanding the relative development of goods and services inflation
Historically, stronger dynamics in services prices than in non-energy industrial goods (NEIG) prices have led to a persistent positive gap between services and NEIG inflation rates. However, the relative price of goods versus services rose rapidly in 2021-2022 before subsequently falling back.
The increasing energy demand of artificial intelligence and its impact on commodity prices
The use of artificial intelligence (AI) models has grown rapidly in recent years. This box explores how these models could affect energy demand in the future. Over the period from 2022 to 2026, the AI-related rise in global electricity consumption is projected to equal around 4% of the EU’s total electricity consumption and is likely to be met by either natural gas power plants or renewables. While this increase is significant in absolute terms, it is expected to have a limited impact on gas prices given the vast size of global natural gas markets.
Using corporate earnings calls to forecast euro area labour demand
This box explores the use of corporate earnings calls as a novel, high-frequency source of data for nowcasting and forecasting labour demand in the euro area. Labour demand has started to show signs of cooling following its post-pandemic peak. By applying textual analysis to transcripts of earnings calls, we construct an indicator that correlates strongly with the euro area job vacancy rate. This metric enables us to produce timely forecasts ahead of official data releases. Utilising a mixed data sampling (MIDAS) regression approach, we use this indicator to forecast the job vacancy rate.
Have euro area exports missed the tech train?
This box compares euro area export performance in high-tech sectors with that of China and the United States. While the euro area has maintained market share in several fast-growing high-tech sectors, it has underperformed in large medium-high-tech sectors. The latter, by virtue of their size, drive overall export growth and account for most of the euro area’s losses and China’s gains in export market shares.
Business investment: why is the euro area lagging behind the United States?
Business investment has grown less dynamically in the euro area than in the United States since the early 2000s, but in the aftermath of the pandemic the differential has been particularly marked. This box breaks business investment down by asset type and assesses some of the factors behind this disparity. Analysis suggests that demand, competitiveness, confidence and policy efficiency all contribute to higher tangible investment in the United States. Weaker investment growth in intangibles in the euro area seems to be related to less innovation at the firm level.
TLTRO III and banks' loan book rebalancing during the pandemic: less 'targeted' than intended for some?
Targeted longer-term refinancing operations (TLTROs)helped supporting bank lending to firms and to households in the course of the COVID-19 pandemic. The use of TLTRO funding for mortgage loans to households had explicitly not been included into the targeted loan categories of these schemes, thereby, limiting potential unintended side effects on residential real estate markets. This paper, by means of an empirical analysis, assesses the impact of the relaxation of TLTRO III conditions at the beginning of the COVID-19 pandemic on euro area banks' loan portfolio composition.
TLTRO III and banks' loan book rebalancing during the pandemic: less 'targeted' than intended for some?
Targeted longer-term refinancing operations (TLTROs)helped supporting bank lending to firms and to households in the course of the COVID-19 pandemic. The use of TLTRO funding for mortgage loans to households had explicitly not been included into the targeted loan categories of these schemes, thereby, limiting potential unintended side effects on residential real estate markets. This paper, by means of an empirical analysis, assesses the impact of the relaxation of TLTRO III conditions at the beginning of the COVID-19 pandemic on euro area banks' loan portfolio composition.
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