BREAKING: The Bank of England vote to reduce the base rate from 5.25% to 5%

Our Head of Economic Modelling, Keith Church, shares his thoughts on what this means for the UK economy.

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  “While this is welcomed news, the Bank’s decision to cut the base rate in August is slightly surprising. However, the Governor did brush off concerns about entrenched services price inflation, labour market tightness and public sector pay increases that may arise after the move.The Bank intends to keep policy “restrictive for sufficiently long” and latest estimates suggest energy bills will rise 10% in October and inflation could be near 2½% at year-end. Only one more rate cut is likely this year.

  Over the last month, financial market predictions of where rates will land have fallen right along the curve. The good news is that this should bring mortgage rates down to levels that should start to spur more activity. This does mean that a fall in house prices now seems unlikely, but it is a buyers’ market.

  Prospects for growth are improving and forecasts are being revised up on the back of strong growth in real wages and tentative signs consumers are coming out of hibernation. Our view is that GDP will grow by 1.3% in 2024 and 1.7% in 2025, slightly above consensus.”

Get in touch if you are interested in learning more about how 4most’s economic forecasting service can support your organisation navigate the evolving economic landscape – info@4-most.co.uk. 

Further reading: Interest rates and Bank Rate | Bank of England