The Bank of England (BoE) is expected to maintain its current interest rate at 4.75% during its upcoming meeting on December 19, 2024. This decision aligns with the BoE’s cautious approach, especially as other central banks, such as the European Central Bank and the U.S. Federal Reserve, are anticipated to reduce rates in the near future.
Recent data indicates that while the UK’s headline inflation has risen to 2.6% in November, core services inflation remains steady at 5%. This persistence in underlying inflation pressures suggests that the BoE may opt for a gradual approach to any future rate cuts.
Market analysts predict that the BoE will begin reducing rates in 2025, with expectations of approximately 70 basis points in cuts over the year. This contrasts with the anticipated rate reductions by other central banks, highlighting the BoE’s measured stance in response to domestic economic conditions.
Investors will closely monitor the BoE’s communications for any indications of its monetary policy trajectory, particularly in light of the UK’s unique economic challenges and the global trend towards monetary easing.
