BoE: too early for a cut in interest rates

BoE: too early for a cut in interest rates
BoE: too early for a cut in interest rates

The British economy is in the midst of a moderate recovery, but inflation has proven more persistent than hoped, so the central bank cannot yet speak of its target being achieved in this area.

The June meeting of the Bank of England (BoE) is expected to end without changes to monetary policy settings. The British economy is in the midst of a moderate recovery, but inflation has proven more persistent than hoped, so the central bank cannot yet speak of its target being achieved in this area. In this context, the BoE intends to maintain its key rate at the current restrictive level of 5.25%. However, the slowdown in the labor market should lead to a reduction in wage pressure in the medium term. And the BoE has signaled that it still wants to reassess the level of its policy rate based on new data, especially as it expects price pressure to ease in the coming months. As long as there are no unpleasant surprises in terms of the evolution of inflation – and especially in the prices of services – and in terms of wages, we expect a first reduction in interest rates, even if prudent, at the August meeting.

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