While leaving interest rates at 4.50% today, the Bank of England seemed less committed to continuing to cut rates by 25bps every quarter. We had already been pondering this possibility and today’s news has tipped us towards putting a pause in the rate cutting cycle into our forecast. But the key point is that, if it does happen, we think it will be a short pause and that rates will still be reduced to 3.50% next year rather than to only 4.00% as investors expect.
We’ll be discussing the outlook for Bank of England, Fed and ECB policy in a 20 minute online Drop-In at 3pm GMT today. (Register here.)
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