Investment - Articles - Comment ahead of Bank of England base rate update


Commenting ahead of tomorrows Bank of England base rate update, Chris Arcari, Head of Capital Markets, Hymans Robertson says: “Markets are expecting a 0.25% pa rate cut tomorrow, followed by between two and three more in 2025.

 While inflation is forecast to accelerate in 2025, at least a portion of that is expected to be linked to energy prices, and, therefore, be temporary. Indeed, recent currency appreciation against the dollar and sharp falls in commodity prices have taken a little of the pressure off headline inflation.

 “That said, domestic inflation pressures persist; average wage growth is still running at close to 6% year on year; inflation in the labour-intensive services sector is at 4.7% year on year; and core inflation, at 3.4%, remains well above the central bank's 2% target.

 “However, while we expect the Bank of England may be slightly more cautious than the markets expect (between two and three 0.25% pa rate cuts in 2025 feels more likely than forecasts of almost four), central banks must set policy based on the balance of risks to growth and, therefore, inflation. Tariffs have skewed these risks more sharply to the downside.

 “US tariffs are both a supply and demand shock to the US. For other economies, US tariffs mainly represent an external demand shock, with a more ambiguous impact on inflation. Falls in commodity prices and currency appreciation against the dollar will lower headline inflation, while some imported goods could become cheaper as exports previously destined for the US enter non-US markets. On the other hand, the scale of US tariffs could damage global supply chains, raising inflation. For this reason, we expect central banks to prioritise the risks to growth over the near-term risks to inflation.”
  

Back to Index


Similar News to this Story

Standard Life complete buyin with Cancer Research Pension
Standard Life, part of Phoenix Group, has successfully concluded a £280m Bulk Purchase Annuity transaction with the Cancer Research UK Pension Scheme,
Bank of England announce first base rate cut since February
Hymans Robertson, XPS Group, Standard Life and Mercer comment on the first rate cut, down 0.25% to 4.25% since February as Bank of England balances c
Comment ahead of Bank of England base rate update
Commenting ahead of tomorrows Bank of England base rate update, Chris Arcari, Head of Capital Markets, Hymans Robertson says: “Markets are expecting a

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.