Bank of England Expected to Cut Interest Rate

The Bank of England is expected to cut its base interest rate by 0.25% to 4.75% during its Monetary Policy Committee meeting, marking the second reduction in three months. This anticipated cut comes amid falling inflation rates, which have reached 1.7%, the lowest in over three years, although concerns linger regarding the inflationary effects of the recent £70 billion budget announced by the new Labour government. Analysts predict a nearly unanimous vote in favor of the cut, with attention shifting to Governor Andrew Bailey's comments on future rate paths in light of the budget's potential impact. Economic projections from the BoE may provide further insights, but there is uncertainty regarding how the new fiscal measures will affect inflation expectations and rate cuts going forward. Market expectations for future cuts have been moderated, now anticipating between two to three additional 25 basis point reductions by late 2025. Overall, while the immediate rate cut seems assured, the Bank's future monetary policy direction appears more cautious and dependent on upcoming economic data.