Bank of England on track to start cutting rates in August - poll

The Bank of England is expected to start cutting the cost of borrowing this August, a Reuters poll found on Wednesday.

In a survey of 65 economists carried out by Reuters, all but two predicted that the BoE's Monetary Policy Committee would reduce the cost of borrowing in August. It would be the first cut since 2020.

The two outliers expected the first cut to come marginally later, in September.

In common with other central banks, the BoE hiked interest rates as it looked to tackle soaring inflation. Since December 2021, it has raised rates 14 times to stand at 5.25%, a 16-year high.

With consumer price inflation now on the wane, however, they have been left on hold since August 2023.

Inflation currently stands at 2.3%, well off a peak of 11.1% in October 2022 and close to the BoE’s 2% target.

However, both wage and services inflation both remain high, at around 6%.

The poll’s median forecast showed Bank Rate would be half a point lower by the end of the year, at 4.75%.

The European Central Bank trimmed rates for the first time in five years last week in a widely-expected move. But it hinted that another cut was unlikely in the short term.

The US Federal Reserve is due to announce it latest policy decision later on Wednesday. It is not currently expected to cut rates until the autumn.

The UK’s economy showed no growth in April, according to the most recent figures from the Office for National Statistics, down from a small 0.4% uptick in March.