BoE poised for possible rate cut – poll

The Bank of England (BoE) may cut interest rates on Thursday after keeping them at a 16-year high of 5.25 per cent for the past year, but uncertainty remains.

Economists polled by Reuters last week expect a narrow 5-4 vote by the Monetary Policy Committee (MPC) in favour of a quarter-point cut. Financial markets on Wednesday were pricing in at 66 per cent chance of a quarter-point rate cut.

In June, the MPC voted 7-2 to hold rates steady, but several members were close to voting for a cut. Inflation returned to the BoE’s 2 per cent target in May, but concerns about medium-term inflation drivers like service prices and wages persist.

Services price inflation remains high at 5.7 per cent, raising questions about underlying pressures.

Economist Jack Meaning advises against delaying a rate cut, as headline inflation may rise above 2 per cent by September.

However, the MPC might be cautious, given recent economic strength and the persistent inflation in services. Ruth Gregory of Capital Economics suggests the BoE might wait due to these factors.

Attribution: Reuters