Is the Bank of England about to make its first rate cut of the cycle? Live updates and analysis on the market’s anticipation
As the Bank of England prepares to announce its decision on interest rates, the market is divided on whether a rate cut is imminent. With the upcoming general election causing a period of quiet, speculation is high on what the central bank will decide.
Swaps markets are currently pricing in a three-in-five chance of a rate cut, with rates currently at 5.25%. Two members of the Bank of England’s monetary policy committee have already voted in favor of a cut.
Inflation is at its 2% target, but there are concerns about the sticky services component at 5.7%. The labor market is showing signs of cooling, which could be used to justify a rate cut. The timing also favors a cut, as quarterly forecasts are being released today.
However, GDP has exceeded forecasts, leading to the possibility of an upgrade in the Bank of England’s economic growth forecast of 0.4% for this year. More data will be available by the September meeting, including two additional CPI and labor market reports.
In conclusion, the decision on interest rates by the Bank of England could have a significant impact on the economy and financial markets. Investors should stay informed and be prepared for potential changes in the market based on the central bank’s decision.