Economists expect the Bank of England will hold interest rates

Name: Economists expect the Bank of England will hold interest rates | Open Video
Uploaded: 2024-10-07T12:37:06+00:00
Duration: 1 min 54 s

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The Bank of England is widely expected to leave interest rates on hold this week
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according to a Citi-A-M poll of top economists. None of the 17 economists we surveyed thought the central bank would lower interest rates at its next meeting on Thursday
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However, all bar one thought policymakers would waive through a cut in November
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Still, economists did not expect the bank to opt for back-to-back rate cuts later this year
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with 94% suggesting that a November cut would be the last of 2024
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So, why does this matter? The survey signals that economists expect the bank to take a slow and steady approach to cutting interest rates
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Last month, it lowered rates to 5%, the first cut since March 2020
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However, the bank is wary that inflationary pressures have not yet been decisively tamed
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Although the headline rate of inflation is at 2.2%, just 20 basis points above the Bank of England's 2% target
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economists widely anticipate that it will increase later this year, as the downward drag from lower energy prices fades
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inflation, widely seen as a more accurate gauge of domestic inflationary pressures, still remains above
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5%. Given this, the Bank of England is expected to take a more cautious approach than overseas
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counterparts like the US Federal Reserve and European Central Bank. The latter cut rates last week
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for the second time this year, while the Fed is due to announce its latest rate decision on Wednesday
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Markets are pricing in a 0.25% cut, its first since the pandemic
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nine of the 17 economists surveyed by Citi-A.M thought the bank rate would settle at 3% next year
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while a further four expected rates would stand at 3.5%. Make sure to go to Citiam.com and follow us on socials for all the news and ysis on the bank's decision on Thursday

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Economists expect the Bank of England will hold interest rates

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