The Bank of England is odds-on to cut interest rates to 4 per cent at next Thursday’s meeting, maintaining the rate of one reduction per quarter seen since August 2024. What happens next is less clear. The labour market is now materially weaker than it was at the start of the year, but at the same time inflation isn’t going away: CPI rose unexpectedly in June from 3.4 per cent to 3.6 per cent.
The Monetary Policy Committee is divided. In June it voted 6-3 to keep rates on hold; in May there were five votes for a 25bps cut, two for a hold and two for a 50bps cut. Once August is done, the market still sees one further base reduction this year as probable, but it’s far from set in stone.
As Deutsche Bank economists summed up last week, “calls for fewer rate cuts alongside calls for bigger rate cuts [on the MPC] will linger until we get further clarity around the economic outlook.”
Eurozone: Sentix investor confidence
US: Factory orders
Japan: BoJ meeting minutes
UK: BRC retail sales
China: Services PMI
Eurozone: Composite & services PMIs, producer price index
Japan: Services PMI
UK: Composite & services PMIs
US: Composite & services PMIs
China: Imports/exports, trade balance
Japan: Leading economic index
UK: BoE interest rate decision, Halifax house price index
China: M2 money supply
Japan: Current account, trade balance
US: Inflation expectations
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