abrdn: BoE interest rate outlook cloudier from now on

abrdn: BoE interest rate outlook cloudier from now on

7 november 2024

Rente Centrale bank Verenigd Koninkrijk
Rente (03)

Luke Bartholomew, Deputy Chief Economist ar abrdn, comments on today's Bank of England interest rate decision:

'A cut from the Bank of England was always extremely likely today. But the outlook for interest rates from here has become more clouded following both the Budget and the US presidential outcome. The fiscal stimulus announced in the Budget puts upward pressure on growth and inflation in the near term, which will keep rates a bit higher than they otherwise would have been.

Meanwhile the stronger dollar and higher US yields following the US election result represents a challenge for the Bank, as a weaker pound may lead to more imported inflation pressure, while higher US borrowing costs risks pulling UK market rates higher than policymakers want.

On balance, we expect the Bank’s gradual pace of easing to continue, with quarterly 25bps rate cuts through next year but there are now risks in either direction, which could keep the rates market volatile.'

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