95% Probability of BoE Rate Cut as Economists Anticipate Clues on Future Reductions

In the coming days, the Bank of England (BoE) is scheduled to announce its decision regarding interest rates, with analysts predicting that the central bank will opt to maintain the current rate of 5.25%. However, markets are indicating a strong likelihood that the BoE will soon cut rates, with nearly 95% probability according to LSEG data. While the majority of economists surveyed by Reuters suggest that the Bank Rate will remain unchanged, investors are eagerly awaiting clues concerning future rate reductions as inflation continues to decline. The European Central Bank (ECB) has previously announced plans to decrease borrowing costs, and market experts believe that the BoE may follow suit in June or August. The uncertain trajectory of the BoE’s interest rate path has led to heightened anxiety among UK mortgage providers, who have been raising rates left, right, and center. Despite this, there is no expectation of a rate cut at present, as no one is currently betting on such a development. The Monetary Policy Committee (MPC) is slated to meet on Thursday, during which Governor Andrew Bailey and his colleagues will provide additional insight into their projections for the economy and the direction of interest rates going forward. Ultimately, Prime Minister Rishi Sunak is expected to benefit from any rate cuts, which could prove advantageous as elections are anticipated later this year. Sunak has previously informed voters that the economy is showing signs of improvement, although his party remains behind the opposition Labour Party in public opinion polls.