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22/05/24
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Rate Cut in June by BoE Less Likely After Inflation Data – Brokerages
On Wednesday, Morgan Stanley, Barclays, and Goldman Sachs said that a rate cut in June by the Bank of England was now less likely, after a smaller-than-expected decline in British inflation.
According to Goldman, the British central bank will likely begin cutting interest rates from Aug., as it dropped its prior forecast of cuts starting in June.
On Wednesday, the UK’s Office for National Statistics said in the 12 months to April, the consumer price index (CPI) lifted by 2.3%, sharply lower than March’s increase of 3.2% and the lowest since Jul. 2021.
Economists and the BoE had however expected a bigger fall to 2.1%, slightly higher than the central bank’s target of 2%, after April’s big cut in household energy tariffs.
Goldman forecasts the BoE will cut rates twice this year, versus a previous forecast of 3 cuts.
Last week’s data showed British wages rose by more than anticipated, but other numbers indicated the labor market was losing some of its inflationary momentum.
Barclays said it did not expect the BoE would deliver the first rate cut in June. It maintained its forecast of 3 cuts of 0.25% this year under review for more UK activity data later this week.
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