By leaving interest rates at 5.00% the Bank of England showed it is more like the ECB than the Fed and will continue to cut interest rates gradually rather than rapidly. We expect only one more 25 basis point cut this year, although the pace of cuts may quicken next year with rates eventually falling to 3.00% rather than to the 3.25-3.50% priced into markets.
We’ll be discussing the differences in the policy outlook for the Bank, the ECB and the Fed in a 20-minute online briefing at 3pm BST today. (Register here.)
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