Bank of England inches one step closer to a summer rate cut

BOE News

Bank of England inches one step closer to a summer rate cut
MacroeconomicsCPIInflation
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The Bank of England is undoubtedly turning more optimistic, but it’s keeping its options open amid some uncertainty surrounding the near-term inflation numbers.

We still narrowly expect the first rate cut in August. The Bank of England has kept rates on hold, but that's soon to change The Bank of England is getting very close to its first rate cut. That much is clear from the latest policy statementwhich, while keeping rates on hold at 5.25%, has a distinctly more optimistic flair. It echoes recent comments from Governor Andrew Bailey, who has been hammering home the message that the UK’s inflation outlook is quite different to the US.

We’re still leaning slightly more towards an August start date for rate cuts, though it’s a close call. What isn’t in doubt, is that the Bank is comfortable with moving ahead of the Fed. A look at the new forecasts shows the all-important inflation projection for two years’ time bang on 2%. That forecast is premised on market rate expectations, and what that tells us – at least implicitly – is that the Bank isn’t uncomfortable with current market pricing for two rate cuts this year.

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