From Morningstar: 2024-06-19 20:27:00

The Bank of England has decided to keep interest rates at 5.25%, with a potential cut likely in August 2024. The decision was expected, resulting in a muted market response.

The BoE cited reasons for holding rates, including inflation not yet sustaining at the target rate and strong domestic demand. The cautious approach signals that rate cuts may take more time.

Experts predict rate cuts are inevitable but uncertain of the timing. The BoE’s data-driven decisions point towards upcoming cuts once inflation stabilizes.

Fund managers anticipate the next rate cut in August, expecting core inflation progress. The BoE aims for a smooth transition, preparing for consumer reactions to the reduction.

Consumers might see lower cash savings rates with rate cuts but cheaper consumer debt. Equities are expected to benefit more than bonds from rate cuts, potentially aiding the UK’s economy recovery efforts.

Lower interest rates could stimulate spending and boost GDP growth, benefitting businesses. However, uncertainties remain regarding the long-term effects of rate cuts on the UK economy.



Read more at Morningstar: Bank of England Holds Rates Despite Hitting 2% Target