Notizie economiche
01.08.2024

BoE reduces its Bank Rate by 25 basis points to 5.00%

The Bank of England (BoE) reported on Thursday its Monetary Policy Committee (MPC) voted by a majority of 5-4 to decrease the Bank Rate from 5.25 per cent to 5.00 per cent at its August meeting. This was the first rate reduction since the pandemic. Meanwhile, four MPC members preferred to keep the benchmark rate unchanged.

Market participants had been split on whether the BoE would opt for a hold or approve a 25-basis-point rate cut.

In its policy statement, the BoE notes:

- CPI inflation is expected to increase to around 2.75% in the second half of this year;

- GDP has picked up quite sharply so far this year, but underlying momentum appears weaker;

- MPC expects the fall in headline inflation, and normalisation in many indicators of inflation expectations, to continue;

- Domestic inflationary persistence is expected to fade away over the next few years;

- There is a risk that inflationary pressures from second-round effects will prove more enduring in the medium term;

- It is now appropriate to reduce slightly the degree of policy restrictiveness;

- Restrictive stance of monetary policy continues to weigh on activity in the real economy, leading to a looser labour market and bearing down on inflationary pressures;

- Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further

- MPC continues to monitor closely the risks of inflation persistence and will decide the appropriate degree of monetary policy restrictiveness at each meeting

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