United Kingdom Interest Rate (2024)

The Bank of England lowered its Bank Rate by 25bps to 5% in its August meeting, aligning with expectations of a small majority of the market, but noted that it will move cautiously in loosening monetary policy further until officials are more certain that inflation will remain subdued. The cut lowered the benchmark rate after remaining at 16-year highs for a full year. The decision was noted as “finely balanced”, with four members of the Monetary Policy Council opting to hold borrowing costs unchanged as the slowdown in UK inflation countered higher services price growth and lingering risks that second-round effects can erase the central bank's progress. Still, the Committee noted that it expects headline inflation to fall and inflation expectations to converge toward the target. Additionally, the MPC stated that restrictive policy is due to slack the GDP to below potential and continue softening the labor market, warranting a less restrictive policy stance. source: Bank of England

Bank of England Cuts Rate by 25bps

The Bank of England lowered its Bank Rate by 25bps to 5% in its August meeting, aligning with expectations of a small majority of the market, but noted that it will move cautiously in loosening monetary policy further until officials are more certain that inflation will remain subdued. The cut lowered the benchmark rate after remaining at 16-year highs for a full year. The decision was noted as “finely balanced”, with four members of the Monetary Policy Council opting to hold borrowing costs unchanged as the slowdown in UK inflation countered higher services price growth and lingering risks that second-round effects can erase the central bank's progress. Still, the Committee noted that it expects headline inflation to fall and inflation expectations to converge toward the target. Additionally, the MPC stated that restrictive policy is due to slack the GDP to below potential and continue softening the labor market, warranting a less restrictive policy stance.

2024-08-01

BoE Likely to Start Easing Cycle

The Bank of England is poised to kick off an easing cycle on August 1st, 2024, by reducing the key base rate by 25 bps to 5%, down from a 16-year peak of 5.25%. However, the decision is a close call, as some policymakers may opt to keep rates stable due to concerns over services inflation and wage growth. Inflation held steady at 2% in June, remaining at its lowest level since 2021. Services inflation, however, was high at 5.7%, exceeding the Bank of England's forecast of 5.1%. Meanwhile, the unemployment rate stayed at 2021-highs, while wage growth, although slowing, is still elevated. The Bank of England is also set to unveil fresh growth and inflation forecasts.

2024-08-01

BoE Suggests It Is Ready for Cuts

The Bank of England decided to maintain the Bank Rate at 5.25% during its June meeting, as expected, with two members advocating for a decrease to 5%. Also, some policymakers noted that the decision not to cut was “finely balanced”. Recent economic indicators show inflation has returned to the target of 2%, driven by moderating inflation expectations and declining energy prices from the previous year. GDP growth has exceeded expectations, but underlying economic surveys suggest a slower pace. The MPC acknowledged a looser labor market despite tight historical standards and is committed to maintaining a restrictive monetary policy until inflation risks diminish sustainably. They remain vigilant about persistent inflationary pressures and will adjust policy as necessary based on upcoming economic data and forecasts.

2024-06-20