Steve Matthews, Investment Director, Liquidity at Canada Life Asset Management has given his thoughts on whatThursday’s BoE interest rate decision may look like.
He said: “Looking ahead to the Bank of England’s interest rate decision on Thursday, the decision is likely to be finely balanced as the Monetary Policy Committee decides whether to pull the trigger for the first rate cut, since March 2020.
“In their last meeting, MPC members voted convincingly for no change at 7-2, with only Dhingra and Ramsden calling for a cut to 5%. While last week’s Consumer Price Index figures holding at 2% might convince others to join Dhingra and Ramsden, concerns over persistently high services inflation and wage growth will be the deciding factors. Services inflation stood at 5.7% in June, missing the MPC’s forecast of 5.1%, which could undermine confidence in cutting rates.
“It will be a very close decision, but we expect the committee to settle on the side of holding rates for this month. It is clear however, that a rate cut is not too far away.”
