It is anticipated that inflation could experience a slight increase in the second half of the year, mainly due to the annual comparison base affected by last year’s energy price declines.
He Bank of England (BoE) chose to keep its main interest rate at 5.25% at its last meeting, despite inflation in the United Kingdom falling to 2%, thus achieving the goal established by the institution. This decline, the lowest since July 2021, was received positively, although the BoE warns that it does not guarantee a sustained return towards the desired objective.
It is anticipated that inflation could experience a slight increase in the second half of the year, mainly due to the annual comparison base affected by last year’s energy price declines. The BoE underlines that it will continue to closely monitor indicators of persistent inflationary pressures, as well as the overall resilience of the economy, including aspects such as labor market tightness, wage growth and services inflation.
BOE projections
Regarding the August projections, the BoE indicates that it will evaluate all available information to determine whether the risks of persistent inflation are decreasing, which will guide your future decisions on interest rate policy.
In the Monetary Policy Committee vote, seven members supported keeping interest rates unchanged, while two members expressed their preference for reducing them by 0.25 percentage points, to 5%.
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Reuters.
There is speculation in the markets about the possibility of a rate cut in August, especially if indicators such as wage growth and service prices decline in the next month. Analysts point out that the BoE has left this possibility open in its recent statements, although they also consider that the outcome of the elections and scheduled economic updates could influence the final decision.
Although the BoE shows some willingness towards a rate cut, sremains cautious and will wait to evaluate the next economic data before making a decision definitive at its next monetary policy meeting.
Source: Ambito
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