Borrowing costs are set to ease further as the Bank of England contends with stagnant growth and rising unemployment, experts have predicted.<\/p>\n
Most economists think the Bank\u2019s Monetary Policy Committee (MPC) will cut interest rates by 0.25 percentage points to 4% on Thursday.<\/p>\n
It could release pressure for some mortgage holders amid hopes that cheaper deals will enter the market if the Bank\u2019s base rate is lowered further.<\/p>\n
Interest rates have been steadily cut over the past year from a peak of 5.25%.<\/p>\n
Economists think a slowdown in the UK jobs market could prompt the MPC to ease monetary policy.<\/p>\n
Official data from the Office for National Statistics (ONS) showed the rate of UK unemployment increased to 4.7% in the three months to May \u2013 the highest level for four years.<\/p>\n
And average earnings growth, excluding bonuses, slowed to 5% in the period to May to its lowest level for almost three years.<\/p>\n
Bank of England Governor Andrew Bailey said earlier this month that the Bank would be prepared to cut rates if the jobs market showed signs of weakening.<\/p>\n
Furthermore, ONS data showed the UK economy contracted in both April and May, further putting pressure on policymakers to ease borrowing costs.<\/p>\n
Andrew Goodwin, chief UK economist for Oxford Economics, said it would be a \u201cmajor surprise\u201d if the MPC does not cut interest rates on Thursday.<\/p>\n
\u201cWith pay growth continuing to cool and Bank rate still well above the level that most committee members would consider to be neutral, it would be a major surprise if the MPC didn\u2019t cut Bank rate by another 0.25 percentage points on August 7,\u201d he said.<\/p>\n
However, he said it is unlikely that the committee will speed up its pace of interest rate cuts over the rest of 2025, as signs of a slower pace of job losses \u201csignificantly reduce the urgency of the situation\u201d.<\/p>\n
Furthermore, some policymakers may be more concerned by recent inflation data, with prices rising at the fastest rate in 15 months in June.<\/p>\n
Rising food inflation has put pressure on the overall rate in recent months.<\/p>\n
Jack Meaning, an analyst for Barclays UK, said he was expecting rates to be cut to 4% but that there was likely to be a \u201cthree-way vote split\u201d amongst the nine-person MPC due to \u201cdifferent interpretations of the recent flow of data\u201d.<\/p>\n
He predicts two members voting to keep the level at 4.25%, and another two opting for a larger 0.5 percentage point cut.<\/p>\n
But he said a \u201clack of smoking gun\u201d in relation to recent data could motivate committee members \u201cin the middle ground to remain gradual, careful and non-committal\u201d in relation to rate cuts.<\/p>\n","protected":false},"excerpt":{"rendered":"Borrowing costs are set to ease further as the Bank of England contends with stagnant growth and rising…\n","protected":false},"author":2,"featured_media":315307,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3090],"tags":[936,40703,51,16690,1700,25547,78137,114865,16,15],"class_list":{"0":"post-315306","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-bank-of-england","9":"tag-bank-of-england-governor","10":"tag-business","11":"tag-earnings-growth","12":"tag-economy","13":"tag-monetary-policy-committee","14":"tag-mpc","15":"tag-percentage-points","16":"tag-uk","17":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114966473653471925","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/315306","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=315306"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/315306\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/315307"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=315306"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=315306"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=315306"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}