The Bank of England is widely anticipated to maintain interest rates at 4.5 per cent this week, given the persistent nature of wage growth and inflation data.
The majority of analysts predict a seven to two vote in favour of maintaining the current rate from the Bank's Monetary Policy Committee, with external members Swati Dhingra and Catherine Mann advocating for a 25 basis point reduction, as reported by .
Interest rate swaps suggest a 95 per cent likelihood of the Bank holding the rate, with a 77 per cent chance of a reduction at the central bank's meeting in May.
READ MORE: {}
However, market opinion is currently divided on whether a cut will be implemented in August.
Overall, they anticipate rates to decrease by 0.5 per cent throughout 2025. "A gradual and careful approach, in our view, leans against the need for back-to-back rate cuts – especially with headline CPI on the rise," commented Deutsche Bank's chief 海角视频 economist Sanjay Raja.
At the Bank of England's previous meeting last month, the MPC voted to lower interest rates by 0.25 per cent, although two members unexpectedly voted for a 0.5 per cent cut.
The statement that caught the attention of markets during the February meeting was the Bank's commitment to a "careful approach" to further easing of interest rates, implying a slower pace of reductions should be anticipated.
"There's little that's happened since the February meeting that will have caused officials to shift their position," added James Smith, ING developed markets economist.
Most Read
Recent economic indicators have shown an increase in inflation, which has climbed to three percent in January, above the Bank of England's earlier forecasts, while wage growth is staying at six percent and services inflation at five percent.
"With CPI inflation uncomfortably above the Bank's target, the Bank seems to be taking a cautious approach to policy setting, even though it views many of the drivers of short-term inflation as temporary in nature," Ranjiv Mann, portfolio manager at AllianzGI, described the current situation.
He notes that, despite some relief from softening services inflation, "Underlying services has inflation softened, providing some comfort to policymakers, although companies are passing on rising costs from tax hikes and the disruption of global supply chains coming from growing trade uncertainty."
The City has been concerned about a potential slump in the jobs market, with surveys hinting at declining intentions to hire, yet these concerns haven't been reflected in the tangible data so far. "Companies are required to report redundancies to the government via an HR1 notification," ING's Smith clarified, assuring that "These haven't shown any discernible uptick so far."
Raja echoed a sentiment of stability in his observation that labour market indicators have hinted at some steadiness since the Bank's February decision, making the case for maintaining current restrictive policy measures without hastening to reduce them. "Given the broad consensus for a 'careful' approach to removing policy restraint, we expect the MPC to be in no rush to cut rates," he concluded.