Inflation developments in the euro area and the Bank of England's decisions on interest rates

Revised official data released on Thursday showed that the inflation rate in the euro zone, which includes 21 countries, rose in August by a lower rate than previous estimates.

The European Union's statistics agency said inflation in the single currency area slowed to 3.2 percent last month, a slight revision from the 3.3 percent published on September 1. Consumer prices rose by 2.9 percent in July.

The inflation rate in countries that use the euro is still higher than the target level set by the European Central Bank of 2 percent.

The inflation rate in food and beverage prices also slowed to 1.1 percent in August, down from 1.2 percent in July, according to the revised data.

The inflation rate in France, the second largest economy in the European Union, was also revised downward, rising to 2.6 percent in August, instead of the previous estimate of 2.7 percent.

The European Central Bank raised interest rates last week for the second time this year, in light of increasing fears of rising inflation as a result of renewed tensions in the Middle East, and also opened the door to the possibility of further increases.

Next Sunday, the city of Riyadh will host the third edition of the International Facilities Management Conference and Exhibition (SFMA EXPO 2026), under the patronage of the Minister of Municipalities, Majid bin Abdullah Al-Hogail, during the period from 20 to 22 September, at the Riyadh International Convention and Exhibition Center, under the slogan “Smart Facilities... Smart Cities.”

The conference was organized by the Saudi Facilities Management Association, with the participation of more than 225 entities, more than 200 local and international speakers, in addition to more than 120 workshops, to discuss a number of specialized topics in facilities management, modern technologies, operation, maintenance and sustainability solutions, and their role in raising the efficiency of facilities and supporting the transition towards smart cities.

The conference's proceedings address a number of topics, most notably technology and digital transformation, digital twins and predictive maintenance, sustainability and environmental and social governance, operation and maintenance, strategies for the work environment and hybrid offices, project and financial management, leadership and strategy, in addition to the health and well-being of building occupants.

The conference will be accompanied by an international exhibition in which government agencies, companies, and providers of services and technologies specializing in facilities management participate, to review modern solutions and practices in the sector, in addition to an innovation area and specialized workshops.

The conference comes in light of the growth witnessed by the facilities management sector in the Kingdom, with the market size exceeding 180 billion riyals ($48 billion) in 2024, with expectations of annual growth exceeding 7 percent until 2030, driven by the expansion of smart city projects and major projects, and the growing demand for operation, maintenance, and asset and facility management solutions.

The Bank of England kept interest rates unchanged on Thursday, but toughened its tone on inflation risks, expecting the rate of price increases to exceed 4 percent early next year, and warning that continued conflict in the Middle East and turmoil in energy prices for a prolonged period could prompt it to tighten monetary policy again.

The Monetary Policy Committee voted by 6 votes to 3 to keep the interest rate at 3.75 percent, while three members supported raising it to 4 percent.

But the minutes of the meeting showed a more stringent shift in the bank’s tone, with increasing risks surrounding the path of inflation, especially in light of the continued rise in global energy costs.

Conservative Andrew Bailey said: “So far, rising global energy costs have had a limited impact on the setting of prices and wages in the UK. “But the longer these fluctuations persist, the greater their impact on inflation, and the more likely we will need to raise the bank’s policy rate to ensure that inflation returns to our target level of 2 percent.”

The bank explained that inflation risks have tended to rise more since the publication of its latest economic forecasts in July, noting that energy price movements since then resemble a “negative” scenario that entails the risk of inflation consolidation.

The Bank of England raised its estimate for British economic growth in the third quarter to 0.4 percent, from 0.1 percent in its previous forecast. But on the other hand, he expected inflation to “now slightly exceed the 4 percent barrier” by early 2027.

In conjunction with the interest rate decision, the Bank of England made a major change in its approach to reducing its holdings of British government bonds, which had accumulated during previous periods of monetary stimulus.

The Monetary Policy Committee announced that it aims to reduce its holdings of government bonds held for monetary policy purposes to zero by 2034, while retaining some of the very long-term bonds that the bank has purchased to support the issuance of banknotes.

In a shift from the previous approach based on active selling of bonds in the market, the bank decided to hold bonds maturing before 2035 until their maturity date, while it will study the possibility of selling bonds maturing between 2035 and 2049 to the government.