Bank of England to trim Bank Rate on Aug 1 and once more this year, economists say
reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/cb-polls?RIC=GBBOEI%3DECI BoE poll data
reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/econ-polls?RIC=GBGDPQP economic poll data
By Jonathan Cable
LONDON, July 24 (Reuters) -The Bank of England will trim Bank Rate to 5% next week, a majority of economists said in a Reuters poll, and with inflation expected to hover around target, it will embark on a slow and steady reduction path with one more cut this year.
However, markets are only pricing in around a 45% chance of a cut and several economists declined to say whether the first cut would come in August or September. #BOEWATCH
Bank Rate has been at a 16-year high of 5.25% since last August. The BoE was one of the first central banks to start raising borrowing costs after the COVID-19 pandemic and, like its peers, is now looking at easing policy.
Over 80% of economists, 49 of 60, in the July 18-24 poll said the Bank would cut to 5% on Aug. 1. However, a similar sample of respondents in a June poll were more convinced of a move next week, with 97% predicting it then.
The Bank will publish its quarterly Monetary Policy Report alongside the rate announcement next week and hold a press conference.
"We look for a 25 basis point rate cut at next week's meeting, although the call appears much closer than it did several weeks back. The case for lower rates is far from clear," noted Allan Monks at J.P. Morgan.
"If rates are lowered in August, it looks likely to happen on a close 5-4 vote."
In June, the rate-setting Monetary Policy Committee voted 7-2 to leave Bank Rate on hold but some members said their thinking was now "finely balanced".
An August cut would put the BoE ahead of the U.S. Federal Reserve, which is expected to wait until September, but behind the European Central Bank which made its first cut in June and although it paused this month, it said September was "wide open".
British inflation held at 2% in June - the Bank's target - but defied forecasts for a slight fall, and while wages grew a bit more slowly, they still increased at a pace normally too strong for the Bank, and markets reduced bets on an August move.
Wages rose 5.7% in the three months to May from a year ago, close to double the rate that would be consistent with the BoE's 2% inflation target.
Still, inflation was expected to be relatively benign and close to target through 2025.
PAUSE FOR BREATH
Following August's trim, the Bank will pause in September before cutting 25 basis points in November to put Bank Rate at 4.75%, median forecasts showed. It will take another breather in December.
Asked what was more likely regarding their end-2024 forecasts, 77% of respondents, or 17 of 22, to an extra question said that Bank Rate would be higher than they expect.
It will be a similar slow and steady pace next year with 25 basis point cuts in the first and second quarters, 50 in the third and 25 in the fourth, to put Bank Rate at 3.50% by end-2025.
"A 25 basis points rate cut a quarter, basically. A very gradual path towards where we think the terminal and the neutral rate is, which is just around 3%," said Sanjay Raja at Deutsche Bank.
"We get there in summertime 2026, so it's a very protracted rate-cutting cycle towards neutral policy."
The path for growth will also be steady - the economy was predicted to expand 0.3% each quarter through to the end of 2025.
Across this year, GDP growth will pick up 0.8% before an acceleration to 1.3% next year, a touch faster than expected in June.
(Other stories from the Reuters global economic poll)
Reporting by Jonathan Cable; additional reporting by Hari Kishan; polling by Sarupya Ganguly; Editing by Bernadette Baum
Actifs liés
Dernières actualités
Avertissement : Les entités de XM Group proposent à notre plateforme de trading en ligne un service d'exécution uniquement, autorisant une personne à consulter et/ou à utiliser le contenu disponible sur ou via le site internet, qui n'a pas pour but de modifier ou d'élargir cette situation. De tels accès et utilisation sont toujours soumis aux : (i) Conditions générales ; (ii) Avertissements sur les risques et (iii) Avertissement complet. Un tel contenu n'est par conséquent fourni que pour information générale. En particulier, sachez que les contenus de notre plateforme de trading en ligne ne sont ni une sollicitation ni une offre de participation à toute transaction sur les marchés financiers. Le trading sur les marchés financiers implique un niveau significatif de risques pour votre capital.
Tout le matériel publié dans notre Centre de trading en ligne est destiné à des fins de formation / d'information uniquement et ne contient pas – et ne doit pas être considéré comme contenant – des conseils et recommandations en matière de finance, de fiscalité des investissements ou de trading, ou un enregistrement de nos prix de trading ou une offre, une sollicitation, une transaction à propos de tout instrument financier ou bien des promotions financières non sollicitées à votre égard.
Tout contenu tiers, de même que le contenu préparé par XM, tels que les opinions, actualités, études, analyses, prix, autres informations ou liens vers des sites tiers contenus sur ce site internet sont fournis "tels quels", comme commentaires généraux sur le marché et ne constituent pas des conseils en investissement. Dans la mesure où tout contenu est considéré comme de la recherche en investissement, vous devez noter et accepter que le contenu n'a pas été conçu ni préparé conformément aux exigences légales visant à promouvoir l'indépendance de la recherche en investissement et, en tant que tel, il serait considéré comme une communication marketing selon les lois et réglementations applicables. Veuillez vous assurer que vous avez lu et compris notre Avis sur la recherche en investissement non indépendante et notre avertissement sur les risques concernant les informations susdites, qui peuvent consultés ici.
