The likelihood of an interest rate cut by the Bank of England tomorrow has decreased, according to the City, following a rise in core inflation in August. The odds of the BoE maintaining borrowing costs have increased to 73%, up from 65% before the inflation report was released. Monica George Michail, an economist, noted that underlying inflation remains elevated, reducing the chances of a rate cut. Experts believe that recent data won’t trigger a surprise rate cut.
In other news, UK rents have soared by 8.4%, while house price inflation has slowed to 2.2% in July. Google has won a legal challenge against a €1.49bn antitrust fine imposed by the EU in 2019. Meanwhile, Stuart Rose has taken control at struggling retailer Asda amidst declining sales.
The pound has risen as the likelihood of an interest rate cut diminishes, signaling confidence in the UK economy. Experts predict that a rate cut may still occur later this year, but at a slower pace compared to the US. Despite today’s inflation report, the BoE is expected to leave interest rates unchanged, with a potential rate cut in November. Professor Costas Milas warns of potential inflationary pressures from public sector pay deals and suggests that the BoE should keep rates unchanged for now.
Overall, the UK economy is facing challenges with rising rents, slowing house price inflation, and uncertain interest rate decisions. Despite some positive indicators, experts remain cautious about the future economic outlook.
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