BANK OF ENGLAND WILL CUT RATES IN AUGUST, AT LEAST ONE MORE EXPECTED THIS YEAR

The Bank of England will start cutting interest rates in August and most of them expect at least one more reduction this year despite persistently high pay and services inflation. One of the first central banks to start raising rates following the worst of the COVID pandemic, the BoE lifted Bank Rate by 515 basis points between December 2021 and August 2023 to a 16-year high of 5.25% to tackle soaring price pressures in the economy.

Overall inflation eased to 2.3% in April, close to the central bank's 2.0% target, from a peak of 11.1% in October 2022. A hot job market has started slowing and official statistics on Wednesday showed the economy stalled in April, partly due to exceptionally rainy weather. However, wage and services inflation, both watched closely by the BoE, are still around 6%. Only two of 65 economists polled expected the BoE to wait until September to cut rates instead of August. But all 24 who participated in both the latest and last month's poll and had previously forecast a cut on June 20 moved their call to August.

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