Bank of England likely to move closer to first rate cut since 2020

LONDON - The Bank of England is likely to take another step towards its first interest rate cut in four years on Thursday as inflation falls, but will probably be cautious about signalling that a move is imminent.

"We view further caution as reasonable," said Paula Bejarano Carbo, a National Institute of Economic and Social Research economist, citing still-strong pay increases in Britain's tight jobs market and uncertainty over conflict in the Middle East. But the BoE would probably be reluctant to send an explicit signal about the timing of a first cut on Thursday, he said.He predicts Bank Rate will be lowered three times to 4.5% by the end of 2024, starting in August.

But some said Deputy Governor Dave Ramsden might join Swati Dhingra who has so far cast the solitary vote for a cut. There might also be a message in the BoE's new inflation projection: if it lowers the two- and three-year forecasts significantly it would be interpreted by investors as a signal that they are pricing in too few interest rate cuts.Bailey and other officials will hold a press conference at 1130 GMT, half an hour after the rate decision is announced along with minutes of May's meeting and its latest forecasts.

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