Will BoE Cut Interest Rate In August?

It is like a coin toss when the Bank of England decides on interest rates next week. The market is not as sure as most analysts that a rate cut will occur next week. There is disagreement among the members of the central bank’s policymaking committee; some support lowering interest rates, while others are opposed. Since the last election, officials have not made many public remarks, which has increased uncertainty.

A mixed picture is painted by economic data. BoE’s aim for inflation has been reached, although wage growth is still strong. As a result, market expectations for a rate cut in August have decreased. In spite of this, analysts predict that monetary policy will gradually loosen in the upcoming months.

The Federal Reserve and the European Central Bank, among other central banks, may follow the Bank of England’s lead, thus observers will be keenly following its decision. Essentially, the Bank of England must make a difficult choice between the necessity to cut inflation and the possible consequences of a weakening economy.