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August 01, 2024BANK OF ENGLAND MONETARY POLICY The Monetary Policy Committee (MPC) of the Bank of England voted to reduce Bank Rate to 5.0% (-25bps).
UK GDP has grown by 0.7% in Q1 2024 and continuing into the second quarter. However, Business surveys remain consistent with a slower pace of underlying growth of around 0.3% per quarter. Growth is expected to fall in the second half of 2024.
The MPC has examined that the labour market continues to loosen but it remains relatively tight by historical standards.
UK twelve-month inflation remained at 2.0% target in May and June 2024. Inflation is expected to increase to around 2.75% in the second half of the year. The CPI inflation is expected to increase slightly in the second half of this year, mainly due to the smaller drag on twelve-month inflation from domestic energy bills. Core CPI has fallen to 3.5% in June from 5.1% in January.
The MPC will continue to monitor for persistent inflationary pressures, including tight labour market conditions, behaviour of wage growth and services inflation. The Bank of England cautions that monetary policy will need to remain restrictive for an extended period long enough to achieve the 2% inflation target sustainably over the medium term.
The next scheduled monetary policy meeting will be on September 19, 2024.
Source: Bank of England, Monetary Policy Summary; Monetary Policy Report
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