J.P.Morgan now expects BoE to start cutting interest rates in Aug | Inquirer Business

J.P.Morgan now expects BoE to start cutting interest rates in Aug

/ 05:05 PM January 19, 2024

J.P.Morgan now expects BoE to start cutting interest rates in Aug

A statue is silhouetted against the Bank of England in the City of London, Britain, Dec 12, 2017. REUTERS/Clodagh Kilcoyne/File Photo

J.P.Morgan said on Thursday it expects the Bank of England to start cutting interest rates in August this year, citing a possible easing in inflation and optimism about a soft landing.

The brokerage now expects a 75-basis point rate cut by end 2024, taking J.P.Morgan‘s policy rate forecast to 4.5 percent, while the central bank’s current benchmark rate stands at 5.25 percent.


J.P.Morgan had earlier estimated BoE to start cutting rates only in November.


READ: Tobacco duty causes surprise boost to UK inflation in December

Despite a surprise rise in the latest inflation report in December, overall, British consumer prices began to fall faster than expected in the latter months of last year, after having surged to a 41-year high of 11.1 percent in late 2022.

The easing in consumer prices had led many economists to predict that it would be back at the BoE‘s 2 percent target by April or May this year, around 18 months sooner than the BoE was predicting.

READ: Bank of England to hold rates as markets raise bets on 2024 cuts

“The optics of even a brief episode of sub-target inflation is likely to place additional pressure for it (BoE) to start cutting this year”, J.P.Morgan said.

The brokerage also raised its UK economic growth forecast to 0.3 percent in 2024, compared with a prior estimate of 0.2 percent.

Your subscription could not be saved. Please try again.
Your subscription has been successful.

Subscribe to our daily newsletter

By providing an email address. I agree to the Terms of Use and acknowledge that I have read the Privacy Policy.

TAGS: Bank of England, Interest Rates, J.P. Morgan, UK

© Copyright 1997-2024 INQUIRER.net | All Rights Reserved

We use cookies to ensure you get the best experience on our website. By continuing, you are agreeing to our use of cookies. To find out more, please click this link.