"Markets, which only weeks ago expected no change in rates until mid-2025, have now sharply shifted expectations. Investors are betting that the Monetary Policy Committee (MPC) - the Bank's nine-member rate-setting panel - could vote narrowly in favour of a 0.25 percentage point cut, reducing the base rate to 3.75 per cent, the lowest level in nearly three years."
"Inflation, while still above target at 3.8 per cent, has remained below the Bank's forecasts for three consecutive months. Services inflation - a key indicator of domestic pricing pressures - eased to 4.7 per cent in September, under the MPC's 5 per cent forecast. Food price growth has slowed to 4.5 per cent, while private sector wage growth has moderated to 4.4 per cent."
Policymakers face a tightly balanced decision on whether to cut the Bank Rate by 0.25 percentage points to 3.75 per cent amid softer economic signals and impending tax rises. Markets now price a narrow vote for a cut after previously expecting no change until mid-2025. Inflation has cooled to 3.8 per cent and been below forecasts for three months, with services inflation easing, food prices slowing and wage growth moderating. Unemployment has risen to 4.8 per cent and UK government bond yields have fallen. Investment banks remain split on the timing of any MPC action.
Read at Business Matters
Unable to calculate read time
Collection
[
|
...
]