The Bank of England is expected to cut interest rates this week - but further reductions are unlikely as the Bank's rate-setting committee will also have one eye on the Budget
The Bank of England is anticipated to reduce the base rate this week, providing a lift to borrowers. However, expectations for a second cut before Christmas are dwindling.
The MPC will also release its latest inflation and growth forecasts, offering the first insight into whether the Bank believes Labour’s tax and spending plans could increase short-term inflation and stimulate growth. Investors have scaled back their expectations for two rate cuts before year-end after Rachel Reeves announced a £70 billion per annum spending plan, implemented through £40 billion in tax increases and £30 billion in additional borrowing.
He added: "At its September meeting, the Bank of England’s guidance set the stage for another reduction in Bank Rate. Since then, key barometers of inflation’s stickiness — services inflation and pay growth — have continued to fall back more quickly than the MPC had previously forecast. On balance, these positive developments should give most of the MPC the confidence to dial back Bank Rate a little further.
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