Bank of England Rates Decision: What to Expect on 20 June
Adapted from an article by James Gard, of Morningstar.com, 13 June, 2024
August seems more likely than June for a rate cut, but there is still a chance the Bank wrongfoots market consensus
The Bank of England is expected to hold interest rates at 5.25% when it meets next week, following a no-change decision on May 8.
Unlike May’s meeting, June 20’s decision will just be accompanied by a brief statement rather than the full monetary policy report and press briefing. So if there is no change to interest rates this week, there will be little guidance on when this is likely to happen.
Alongside the statement, one clue will come from the voting patterns: last month seven members of the Monetary Policy Committee voted to hold, while two voted for a cut. It’s likely that more of the MPC join the cut cohort, but probably not enough to force a decision.
Money markets, as measured by overnight index swaps, suggest that August 1 is still the most likely date for the Bank of England to make its first rate cut since 2020.
August seems more likely from the point of view of the Bank’s calendar; the quarterly monetary policy report and press conference give policymakers more scope to explain decisions.
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