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Bank of England, Royal Exchange and Statue of Duke Velington in London on February 19, 2025 in London, UK.
Mike Kemp | In the pictures Gets the image
On Thursday, the Bank of England lowered interest rates from 4.25% to 4%, as the Central Bank restores a “gradual” approach to reduced interest rates.
At the last session of the BOE monetary policy, it is supposed to recruit 25 basic points at 25 basic points, but traders and economists sought to see a break of support among the bank’s politicians.
As it turned out on Thursday, MPC of nine members voted most 5-4 to reduce the key interest rate, “bank rate”, 25 basic points, rather than containing it.
Politics had to weigh sticky inflation – Consumer Price Index (IPC) rose to hotter than 3.6% in June with 3.4% in May – With the coolant market market and unsuccessful growth. The gross domestic product of the UK declined by 0.1% per month in May.
Despite different views on politicians in Boe, economists expect a trajectory of interest rates to continue next year.
Jack Mean, the Barclays chief economist, said on the eve of the last political meeting that he expects Boe to continue with a gradual quarterly reduction of the 25-base step towards the banking rate, its key interest rate will reach 3.5%next year.
Ashley Webb, the UK economist, predicts that the Central Bank can further weaken its monetary policy.
“Despite the unexpected increase in IPC inflation in June, we still believe that weakness in the labor market means that it is only a matter of time before wage growth and inflation slowly to rates that correspond to 2% inflation. We believe that the Bank of England will reduce interest rates from 4.25% to 3.00 Participation in the financial market, ”said Wednesday.
No “smoking pistol”
Economists have pointed to the labor market as a key factor of politicians’ decisions, but stated that there was no “smoking pistol” and convincing evidence of a solid downturn in employment figures.
“The question that emerges over this meeting is whether there is a more disturbing deterioration in the job market inevitable,” said James Smith and Chris Turner from the Ing, adding that “Slick is undoubtedly being built.”
The waiter prepares the terrace at the restaurant on the eve of the opening in London, UK, Wednesday, June 18, 2025. Work in the UK has plunged a maximum of five years, and wage growth has slowed more than the forecast.
Bloomberg | Bloomberg | Gets the image
“The number of paid workers has decreased for seven months. This year, the unemployment rate has increased by several tenth interest points this year … (and) the vacancies indeed believe that the job market in the UK has cooled further than in other major economies,” they noted.
But analysts have stated that this is a “slow story”, with most of the weakness in the employment room, concentrated in the field of hospitality, which disproportionately affected recent tax taxes on the national minimum minimum and wages.
“In other words, there is no smoking pistol that can push the main rethinking of the bank’s worldview. Meanwhile, inflation data are still sticky,” said Ing analysts.
