From Morningstar:

The Bank of England is set to announce its monetary policy decision on February 1. The European Central Bank held on January 25, while the Federal Reserve is expected to hold on January 31. The BoE is expected to keep interest rates on hold at 5.25% after the last rate change in August 2023.

Inflation in the UK ticked up to 4% in December, against consensus forecasts for a fall to 3.8%. Despite this, inflation is expected to return to the 2% target at some point next year. Services inflation continues to be a source of mixed messages for economists.

The Bank awaits services inflation easing before cutting interest rates. Wage growth is moderating in the UK, and mortgage rates are starting to adjust downwards in anticipation of rate cuts this year. Inflation uptick was largely driven by discretionary spending on alcohol and tobacco.

There are various opinions on the timing of UK rate cuts. Goldman Sachs expects the first rate cuts in February or March, while Factset points to no change until the second half of the year and 50 basis points of cuts to 4.75% by the end of the third quarter.



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