Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Bank of England poised for rate cuts as businesses plan to ease price hikes

by July 5, 2024
July 5, 2024
Bank of England poised for rate cuts as businesses plan to ease price hikes

Businesses are planning to moderate both price increases and pay rises over the next year, bolstering the case for the Bank of England to cut interest rates at its upcoming August meeting.

A June survey by the Bank revealed businesses expect to increase salaries by an average of 4 per cent over the next year, a slight decrease from 4.1 per cent in May. This suggests a softening in wage pressures, which have been a key factor in maintaining high inflation within the services sector.

The Bank’s monetary policy committee (MPC), which is responsible for setting interest rates, closely monitors this monthly survey. Rob Wood, chief UK economist at Pantheon Macroeconomics, stated that the findings will likely “give the MPC confidence to cut interest rates soon, as the survey signals that high interest rates continue to suppress wage and price inflation”.

Analysts at Citibank echoed this sentiment, noting that the figures “indicate gradual, if consistent, disinflationary progress”.

Financial markets are anticipating that the Bank will reduce its base interest rate on August 1, marking the first policy easing since March 2020. The current base rate stands at 5.25 per cent, the highest in 16 years, having risen from 0.1 per cent.

In May, services inflation, a key measure of domestic price dynamics, exceeded the Bank’s forecast at 5.7 per cent. Nonetheless, headline inflation fell to 2 per cent, aligning with the official target for the first time since July 2021.

The MPC’s last meeting in June indicated a lack of concern over services inflation surpassing projections, fuelling speculation among analysts that borrowing costs may be reduced next month. Investors are anticipating between two and three quarter-point rate cuts this year.

However, the latest survey also highlighted emerging inflationary pressures from businesses planning to increase their profit margins. Nearly 50 per cent of surveyed companies intend to lift margins over the next year, compared to 18.2 per cent expecting to reduce them. Wood commented that this could “keep consumer price inflation running higher than wage growth”.

Household finances, severely impacted by the cost of living crisis, are only now beginning to recover to 2022 levels. Inflation peaked at 11.1 per cent in October 2022, but average wages, which have been increasing at about 6 per cent, have outpaced prices over the past year.

Businesses now forecast inflation to average 2.8 per cent over the next year, slightly down from 2.9 per cent the previous month. They also expect prices to rise by 3.6 per cent over the 12 months to June, the lowest rate since August 2021, down from 3.8 per cent previously.

Read more:
Bank of England poised for rate cuts as businesses plan to ease price hikes

0
FacebookTwitterGoogle +Pinterest
previous post
Penalise startups that list abroad after receiving state aid, urges UK Finance
next post
What Labour’s Victory Means for Employment Law: A Guide for UK SMEs

You may also like

Unleashing Potential: Maverick Trading Review

November 6, 2023

How your eCommerce business can thrive through recession

October 4, 2022

OAP job market boom with seven times more...

January 18, 2023

Wrightbus secures £50 million UKEF financing to turbocharge...

June 9, 2023

Timeless Elegance: Top Decor Trends for a Sophisticated...

July 2, 2024

Make capital allowances permanent, firms urge

March 16, 2023

How to Convert Apple Music to MP3 with...

April 25, 2025

NatWest profits surge 36% as government nears full...

May 2, 2025

Bernie Ecclestone’s £652M fine – A Lesson for...

October 12, 2023

Bus fare cap to rise to £3 across...

October 28, 2024

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Trump ally stands firm against ‘big, beautiful bill’ despite pressure: ‘It’ll completely backfire’

      June 8, 2025
    • Rubio condemns assassination attempt on Colombian presidential candidate Miguel Uribe

      June 8, 2025
    • Obama WH physician says Biden doc should have performed cognitive test

      June 8, 2025
    • Trump warns of ‘serious consequences’ if Elon Musk funds Democrats

      June 7, 2025
    • Musk jokes about reconsidering stance on Big Beautiful Bill after Schiff’s praise

      June 7, 2025
    • Musk deletes explosive posts about Trump and Epstein files

      June 7, 2025

    Categories

    • Business (8,152)
    • Investing (2,019)
    • Politics (15,571)
    • Stocks (3,136)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved