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BANK OF ENGLAND WILL START CUTTING IN Q3 BUT STRONG CHANCE OF Q2 MOVE




The Bank of England will start cutting borrowing costs in the third quarter although 40% of economists saw an earlier trim. That would put it roughly in step with both the United States Federal Reserve and the European Central Bank, both of which are expected to start cutting interest rates in June.

BoE Governor Andrew Bailey said this week central bankers were turning to the question of how long they needed to keep interest rates high and he saw some signs their restrictive policies were succeeding in bringing down inflation pressures. Inflation has fallen from a 41-year peak of 11.1% set in October 2022 and was expected to drop below the Bank's 2% target to 1.8% next quarter - and hover around the goal until at least end-2025 - giving policymakers room for manoeuvre. All but three of 68 economists in the March 11-14 poll forecast at least one cut to Bank Rate from its 16-year high of 5.25% by end-September. A firm minority of around 40% said the first cut would come as soon as the next quarter.

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