Bank of England close to cutting rates from 16-year high
BoE expected to vote 5-4 to cut rates to 5% from 5.25%
Markets see 33% chance that rates will stay on hold
CPI back at 2% but services and wage inflation still high
Few MPC speeches since June meeting due to election
Rate decision at 1100 GMT, press conference at 1130 GMT
By David Milliken
LONDON, Aug 1 (Reuters) -The Bank of England looks in a position to cut interest rates on Thursday after holding them at a 16-year high of 5.25% for the past year, though markets and economists are far from certain the British central bank will take the plunge.
Economists polled by Reuters last week overwhelmingly expected a quarter-point cut but think the vote will be close on the BoE's Monetary Policy Committee, with only a 5-4 majority in favour.
Late on Wednesday, financial markets were pricing in a 66% chance of a quarter-point cut, and then expected one more quarter-point cut before the end of the year.
"It's certainly going to be a finely balanced decision. You can see that from the market pricing," said Jack Meaning, chief UK economist at Barclays.
In June, the MPC voted 7-2 to keep rates on hold, but minutes of the meeting recorded that several of those who voted to hold had been close to voting for a cut.
How those policymakers' views have shifted since then is hard to tell. Only one potential swing voter - chief economist Huw Pill - spoke during the two-and-a-half week window between the end of Britain's election campaign on July 4 and the start of the BoE's pre-decision quiet period last week.
There has also been a change of personnel - with former OECD and finance ministry chief economist Clare Lombardelli succeeding Ben Broadbent as deputy governor, giving the MPC a female majority for the first time.
British consumer price inflation returned to the BoE's 2% target in May and stayed there in June, down from a 41-year high of 11.1% struck in October 2022.
This leaves British inflation lower than in the euro zone - where the European Central Bank cut rates in June - and the United States, where on Wednesdaythe Federal Reserve kept interest rates steady but opened the door to a September cut.
However, the BoE expects headline inflation to edge up over the coming months and is more focused on what it sees as the medium-term drivers of inflation: services prices, wages and more general tightness in the labour market.
Services price inflation is the biggest sticking point. At 5.7% in June, it has fallen much less than the BoE forecast three months ago.
The question for policymakers is whether that represents greater medium-term pressures, or is due to one-off effects such as a surge in hotel prices during concert tours by artists such as U.S. singer Taylor Swift.
NO TIME TO DELAY?
Meaning, a former BoE economist, said policymakers would be wrong to delay a rate cut until September.
"There is always a reason to wait a little bit longer ... (but) if you wait until it's absolutely conclusive, then you've probably waited too long," he said.
By September, official data is likely to show headline inflation back above 2% - superficially making a rate-cut look ill-timed - and, unlike in August, there is no scheduled press conference for Governor Andrew Bailey to explain the decision.
Moreover, updated BoE forecasts on Thursday are likely to still show inflation falling back below its 2% target in the medium term - making a rate cut necessary sooner rather than later, given the time it takes for lower rates to affect prices.
The September meeting is also when the MPC must hold an annual vote on the pace at which it reverses past quantitative easing - a decision that it tries to keep distinct from its regular votes on interest rates.
However, it is possible the MPC will opt for caution.
Bailey in June said that policymakers "need to be sure that inflation will stay low" before cutting rates, and Pill last month said wages and services prices continued to show "uncomfortable strength".
Growth so far this year has also been stronger than the BoE or most economists expected
"While it will be a very close call, the economy's recent strength and the stickiness of services inflation leads us to think that the Bank of England will wait," said Ruth Gregory, deputy chief UK economist at Capital Economics.
QUOTES-Bank of England policymakers split on when to cut rates https://www.reuters.com/markets/rates-bonds/bank-england-policymakers-split-when-cut-rates-2024-07-24/
Reporting by David Milliken; Editing by Kevin Liffey and Chizu Nomiyama
تازہ ترين خبريں
دستبرداری: XM Group کے ادارے ہماری آن لائن تجارت کی سہولت تک صرف عملدرآمد کی خدمت اور رسائی مہیا کرتے ہیں، کسی شخص کو ویب سائٹ پر یا اس کے ذریعے دستیاب کانٹینٹ کو دیکھنے اور/یا استعمال کرنے کی اجازت دیتا ہے، اس پر تبدیل یا توسیع کا ارادہ نہیں ہے ، اور نہ ہی یہ تبدیل ہوتا ہے یا اس پر وسعت کریں۔ اس طرح کی رسائی اور استعمال ہمیشہ مشروط ہوتا ہے: (i) شرائط و ضوابط؛ (ii) خطرہ انتباہات؛ اور (iii) مکمل دستبرداری۔ لہذا اس طرح کے مواد کو عام معلومات سے زیادہ کے طور پر فراہم کیا جاتا ہے۔ خاص طور پر، براہ کرم آگاہ رہیں کہ ہماری آن لائن تجارت کی سہولت کے مندرجات نہ تو کوئی درخواست ہے، اور نہ ہی فنانشل مارکیٹ میں کوئی لین دین داخل کرنے کی پیش کش ہے۔ کسی بھی فنانشل مارکیٹ میں تجارت میں آپ کے سرمائے کے لئے ایک خاص سطح کا خطرہ ہوتا ہے۔
ہماری آن لائن تجارتی سہولت پر شائع ہونے والے تمام مٹیریل کا مقصد صرف تعلیمی/معلوماتی مقاصد کے لئے ہے، اور اس میں شامل نہیں ہے — اور نہ ہی اسے فنانشل، سرمایہ کاری ٹیکس یا تجارتی مشورے اور سفارشات؛ یا ہماری تجارتی قیمتوں کا ریکارڈ؛ یا کسی بھی فنانشل انسٹرومنٹ میں لین دین کی پیشکش؛ یا اسکے لئے مانگ؛ یا غیر متنازعہ مالی تشہیرات پر مشتمل سمجھا جانا چاہئے۔
کوئی تھرڈ پارٹی کانٹینٹ، نیز XM کے ذریعہ تیار کردہ کانٹینٹ، جیسے: راۓ، خبریں، تحقیق، تجزیہ، قیمتیں اور دیگر معلومات یا اس ویب سائٹ پر مشتمل تھرڈ پارٹی کے سائٹس کے لنکس کو "جیسے ہے" کی بنیاد پر فراہم کیا جاتا ہے، عام مارکیٹ کی تفسیر کے طور پر، اور سرمایہ کاری کے مشورے کو تشکیل نہ دیں۔ اس حد تک کہ کسی بھی کانٹینٹ کو سرمایہ کاری کی تحقیقات کے طور پر سمجھا جاتا ہے، آپ کو نوٹ کرنا اور قبول کرنا ہوگا کہ یہ کانٹینٹ سرمایہ کاری کی تحقیق کی آزادی کو فروغ دینے کے لئے ڈیزائن کردہ قانونی تقاضوں کے مطابق نہیں ہے اور تیار نہیں کیا گیا ہے، اسی طرح، اس پر غور کیا جائے گا بطور متعلقہ قوانین اور ضوابط کے تحت مارکیٹنگ مواصلات۔ براہ کرم یقینی بنائیں کہ آپ غیر آزاد سرمایہ کاری سے متعلق ہماری اطلاع کو پڑھ اور سمجھ چکے ہیں۔ مذکورہ بالا معلومات کے بارے میں تحقیق اور رسک وارننگ ، جس تک رسائی یہاں حاصل کی جا سکتی ہے۔
