In the United Kingdom, an increase in the inflation rate was recorded in July, which turned out to be lower than the preliminary expectations of experts interviewed by the media about the dynamic of this indicator and the forecast of the Bank of England.
Against the background of the mentioned result, traders bet that in the coming months, the UK financial regulator will continue to cut interest rates.
In July, in the United Kingdom, the Consumer Prices Index showed an increase of 2.2%. The relevant information was published by the Office for National Statistics on Wednesday, August 14. It is worth noting that the analysts surveyed by the media expected that the mentioned indicator in July would show an increase of 2.3%.
Yael Selfin, chief economist at KPMG UK, says that the mentioned data indicates a dovish turn in the overall trend. According to the expert, the July figures will provide a certain degree of comfort for the members of the Monetary Policy Committee of the Bank of England, who expected a sharper increase in the cost of goods and services.
The forecast of the financial regulator of the United Kingdom provided that inflation would be 2.4% in July. The Bank of England also expected that later in the current year the corresponding indicator would increase to 2.8%. At the same time, the governor of the central bank of the United Kingdom, Andrew Bailey, warned against making decisions about lowering the cost of borrowing too quickly or too much. Against the background of this statement, it became dominant among traders that the continuation of monetary easing by the UK financial regulator would not happen until November.
On August 1, the Bank of England decided to lower the cost of borrowing for the first time since the coronavirus pandemic. The financial regulator of the United Kingdom cut its main interest rate to 5% from a 16-year high of 5.25%. The next meeting of the Bank of England will be held in September. Traders estimate the probability that at this meeting a decision will be made on another lowering of the cost of borrowing as less than 50%.
Inflation in the UK services sector fell to 5.2% in July from 5.7%. This figure is the lowest in more than two years. At the same time, the Bank of England predicted that inflation in the UK services sector in July would be fixed at 5.6%.
As we have reported earlier, Fed’s Raphael Bostic Says More Data Needed to Rate Cut.
