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2025-08-02 14:47:37
The Bank of England faces a dilemma: rising inflation and a slowing economy. Where should UK interest rates go? ⑴ The Bank of England (BoE) faces a difficult balancing act with its upcoming interest rate decision. ⑵ Policymakers need to strike a balance between curbing inflationary pressures and supporting economic growth. ⑶ Data showed that the UK's core CPI rose year-on-year in June, bringing the overall inflation rate to 3.6%. ⑷ The British Retail Consortium warned that food inflation could reach 6% by the end of the year, exacerbating the BoE's concerns. ⑸ Despite rising inflation, the UK's economic outlook is deteriorating, with GDP declining in both April and May. ⑹ Chancellor Reeves' Autumn Budget has led to job cuts, with job vacancies falling to their lowest level since 2021. ⑺ BoE Governor Bailey has recently signaled a dovish tone, suggesting there may be a case for a rate cut. ⑻ The market generally expects the BoE to cut interest rates by 25 basis points in a "gradual and cautious" manner. ⑼ However, the vote could be divided, with some members potentially supporting a bolder rate cut. ⑽ This disagreement may bring uncertainty to the pound, and traders need to pay close attention to the final voting results.
