From Morningstar: 2024-06-19 06:44:00

UK inflation dropped to 2% in May, putting pressure on the Bank of England to cut interest rates. Lower prices for food, furniture, and household goods drove the fall. The bank is expected to hold rates at 5.25% but may cut in August, according to market data.

Core inflation, including services and long-term measures, remains high and a concern for policymakers. Services inflation dropped to 5.7%, but core inflation is at 3.5%. The Bank of England is waiting to see sustained improvement before cutting rates, with expectations around August for a potential decrease.

Economists are divided on when the Bank of England will cut rates, with a possible reduction in August and another in December. Despite May’s inflation drop to 2%, policymakers want to see sustained improvement before making any moves. The bank’s latest forecast sees inflation dropping below target but rising to 2.5% by late 2024.



Read more at Morningstar: Inflation Hits Target, But Will The BoE Cut Rates?