LONDON, May 9 (Reuters) – 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.
The central bank is widely expected to keep its benchmark Bank Rate on hold for a sixth meeting in a row at 5.25% – the highest since 2008 – after its May monetary policy discussions.
The big question for investors is whether the BoE suggests that a cut could come in June – when the European Central Bank has already signalled it will reduce borrowing costs – or, like the U.S. Federal Reserve, holds out for longer.
“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.
Financial markets are fully pricing a first quarter-point BoE rate cut only in August and another in November or December taking Bank Rate to 4.75%, followed by more cuts in 2025.
Source: REUTER
