Bank of England Poised for Rate Cut Amid Inflation Woes

The Bank of England is expected to cut its Bank Rate to 5% next week, according to a Reuters poll of economists. Despite inflation expectations remaining close to target, a gradual reduction path is anticipated. Markets estimate a 45% chance for an immediate cut, with further cuts slated for later this year.

The Bank of England is expected to reduce its Bank Rate to 5% next week, according to a recent Reuters poll. Most economists foresee a steady reduction path, with another cut later this year.

Despite only a 45% market bet on a rate cut, the Bank's current high rate of 5.25% has economists eyeing policy loosening. Over 80% of economists in a mid-July poll predict a rate drop on August 1. The upcoming Monetary Policy Report will shed more light on the situation.

J.P. Morgan’s Allan Monks emphasized the uncertainty of the call, expecting a close vote on the rate decision. The Bank's aim is to handle inflation that has held at 2%. Projections foresee a gradual easing to hit 3.5% by the end of 2025, with a minor GDP rise anticipated this year.